Galen Holdings, the Northern Ireland pharmaceutical group, is to sell the US and Canadian rights for its oral contraceptive Loestrin to New Jersey's Barr Laboratories.
The deal will see Galen dropping two lawsuits against Barr alleging infringements of patents on its femhrt hormone therapy and Estrostep oral contraceptive.
Under the settlement, Barr could launch generic versions of those products half a year after the patents expire.
A separate agreement proposes Barr granting Galen an option to acquire an exclusive licence for Barr's generic version of Galen's Ovcon contraceptive.
Analysts reacted positively to the agreement, which they said removed the risk of Barr releasing a generic Ovcon. The move follows an aborted takeover bid of Galen by Barr in July.
The agreement has three elements. Galen will sell the generic product Loestrin to Barr for $45 million (€40 million) and settlement of outstanding litigation on Estrostep and femhrt.
Galen will also purchase Barr's generic Ovcon for $20 million.
The deal announced yesterday is expected to be closed by the end of 2003, pending various anti-trust reviews.
Mr Roger Boissonneault, Galen chief executive, said: "This is a good deal for both companies. We would exchange a non-core asset for significant value and for a fair resolution of outstanding patent issues. While we remain confident in the strength of the Estrostep and femhrt patents, this transaction would allow us to remove the uncertainties inherent in any litigation."
He added: "In addition, the acquisition of a generic Ovcon along with the introduction of our Ovcon line extension, will enable us to continue to grow this important asset."
Mr Bruce L Downey, Barr's chief executive, said: "These agreements would add a significant new product to Barr's growing portfolio of oral contraceptive products."
"It would also allow both parties to resolve pending patent litigation in a way that will ensure Barr can bring alternative femhrt and Estrostep products to market prior to patent expiration, which will benefit our female healthcare products consumers."
