OverreactionMarket reacting like NRI will receive nothing in future from Vimovo sales in the US but generics never take 100% of the patented product market share. Also, generic drug makers in the US are being sued for price fixing......
https://www.nytimes.com/2019/05/11/health/teva-price-fixing-lawsuit.html Under the terms of the license agreement with Horizon, the Company receives a 10% royalty on net sales of Vimovo sold in the United States, with guaranteed annual minimum royalty payments of US$7.5 million. The guaranteed annual minimum royalty payments are applicable for each calendar year that certain patents which cover Vimovo are in effect and certain types of competing products are not on the market in the United States. Horizon’s royalty payment obligation with respect to Vimovo expires on the later of (a) the last to expire of certain patents covering Vimovo, and (b) ten years after the first commercial sale of Vimovo in the United States. The royalty rate may be reduced to the mid-single digits in the event of a loss of market share as a result of certain competing products. In June 2017, the District Court upheld the validity of two patents owned by Nuvo Ireland and licensed to Horizon covering Vimovo in the United States. Subject to a successful appeal of the decision by the generic competitors party to the suit, this decision is expected to delay generic entry until the expiration of the applicable patents. There is ongoing litigation with respect to other patents covering Vimovo (the latest expiring March 2031), which if the Company is successful, would further prevent generic entry. Horizon and Nuvo Ireland reached litigation settlement agreements with two generic companies, Teva Pharmaceuticals Industries Limited (formerly known as Actavis Laboratories FL, Inc., which itself was formerly known as Watson Laboratories, Inc. – Florida) and Actavis Pharma, Inc. (collectively, Actavis) and Lupin Ltd. and Lupin Pharmaceuticals Inc. (collectively, Lupin), which will allow these generic companies to enter the market in the United States as of January 1, 2025 or earlier under certain circumstances. In February 2018, the Company entered into an amendment to its license agreement with Horizon for Vimovo in the United States that allows Horizon to settle such litigation without the Company’s consent in certain circumstances. Management anticipates that the annual minimum royalty payments will continue into 2022, while a remaining residual royalty will be payable subject to (a) and (b) above.