Several top Indian pharmaceutical companies entangled in long drawn patent litigations with MNCs abroad are increasingly going for out-of-court settlement to save huge legal expenses and time. The companies like Ranbaxy and Dr Reddy's have been fighting several patent cases in various countries engaging expensive lawyers for several years now.

Available data shows that out-of-court settlements on patent infringement cases are turning out to be the new trend, as several domestic companies prefer to settle their disputes with overseas companies outside the court.

The major driving force behind the out-of-court settlement is the long duration and high expenses involved in the legal row. The out-of-court settlements enable the companies to engage in co-development, co-licensing and co-marketing of the product. By reaching out-of-court settlement the companies are in a position to share various information related to the specific product, sources said.

"The pharma companies are opting for outside court settlements, mainly because of the long time and high expenses involved in litigations. It is the best solution for the companies so they can save money and time", Dr Gopakumar Nair, an eminent patent expert and CEO of GNA Patent Gurukul, said.

In a recent development Mumbai based Lupin Ltd has entered into settlement with US pharma major Abbott and Japan's Astellas Pharma on Abbott's blockbuster antibiotic drug 'omnicef', known under the generic name as 'cefdinir'. The company sources said they entered into a settlement with on the grounds of long time for the legal row. However, the company refused to reveal more on the settlement.

Last year Indian pharma major Dr Reddy's Laboratories had reached an agreement with GlaxoSmithKline to bring an end to the long-pending patent litigation on the generic copies of Glaxo's anti-migraine drug 'imitrex'. As per the settlement Dr. Reddy's got approval to market imitrex in US and the product is expected to hit the market by 2008.

The year 2005 witnessed settlement between Ranbaxy Laboratories and Cephalon Inc. As per the settlement with Cephalon, Ranbaxy received a non-exclusive royalty bearing right to market and sell generic version of provigil (modafinil), sleep disorder drug in the US. The companies have also reached a series of agreements to share certain worldwide intellectual property rights on modafinil. However, financial terms of the settlement are not disclosed.

In the same year, Hyderabad based Matrix Laboratories Ltd received a sum of Rs 95 crore for settlement of a patent infringement suit with an undisclosed multinational company.

It is learnt that Dr Reddy's is in discussions with sanofi-aventis for an out-of-court settlement on 'plavix' patent litigation. The company spokesperson said, "Out-of-court settlement is the best solution for the companies, as it involve less expenditure and won't take much time. It is a win-win partnership for the both parties."

According to experts, several such settlements are expected to happen in the pharmaceutical industry in the coming years.