Celgene Corporation CELG announced that it has settled a litigation related to its blockbuster product, Revlimid, with India-based Natco Pharma Ltd. and its U.S. partner, Arrow International Limited, and Arrow’s parent company, Allergan plc AGN.
As per the terms of the settlement agreement, Celgene will allow entry of generic Revlimid before the expiration of the last-to-expire patent listed in the Orange Book in Apr 2027. Celgene has agreed to provide Natco with a license to its patents required to manufacture and sell an unlimited quantity of its generic version of Revlimid in the U.S. from Jan 31, 2026.
In addition, Natco will receive a volume-limited (mid-single-digit percentage of total Revlimid capsules dispensed in the U.S. during the first full year of entry) license to sell its generic version of Revlimid in the U.S. from Mar 2022. The volume limitation is expected to increase gradually each year till Mar 2025, subject to a maximum of one-third of the total Revlimid capsules dispensed in the U.S. in the final year of the volume-limited license under this agreement.
Our Take
Revlimid is approved for several indications including multiple myeloma, myelodysplastic syndromes and relapsed refractory mantle cell lymphoma. The product generated $4.2 billion revenues in the first nine months of 2015, accounting for approximately 64% of total net product sales at Celgene. It is one of the top revenue grossing products at Celgene. Thus, removal of an uncertainty regarding the introduction of a generic version of Revlimid will eliminate a major overhang on the company’s shares.
Celgene carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the health care sector are Achillion Pharmaceuticals, Inc. ACHN and Corcept Therapeutics Incorporated CORT, both sporting a Zacks Rank #1 (Strong Buy).
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