Novartis has agreed to pay GlaxoSmithKline a royalty on sales of a generic version of GSK's antibiotic Augmentin (amoxicillin/clavulanate) sold in the USA as AmoxC.
The move rings to an end a dispute between the two companies centring on the use of a particular bacterial strain used for the manufacture of Augmentin. However, a second lawsuit alleging patent infringement is still ongoing and a verdict in the case is expected later this year.
In the settlement, GSK will get a single-digit royalty on sales of AmoxC or other generics by Novartis affiliate companies from July 2002 to July 2006.
Augmentin has been one of GSK's major products, bringing in sales of around $500 million a quarter last year. However, the start of generic competition in the USA last year, from Novartis, as well as Teva Pharmaceuticals and Ranbaxy Labs, saw first-quarter 2003 revenues of the drug plummet to $218 million.
GSK noted that its ongoing litigation with Teva and Ranbaxy on the use of the bacterial strain is not affected by the latest settlement.