Nov. 19 (Bloomberg) -- Sanofi-Aventis SA granted Teva Pharmaceutical Industries Ltd. and Barr Pharmaceuticals Inc. permission to sell some generic versions of the allergy drugs Allegra and Nasacort before patents expire.

In return, France's largest drugmaker will get royalties on sales of the medicines under the terms of the agreements that end patent litigation with the generic-drug makers, Paris-based Sanofi said today in a statement. Royalties on Allegra, copies of which are sold in the U.S., will be retroactive.

Sanofi sued Teva and Barr in 2001 over the Allegra patents. Teva, under an agreement with the U.S. drugmaker, began selling a generic version in September 2005. Sanofi last year also sued Novartis AG's Sandoz unit over its generic Allegra. Patents on Allegra and Allegra-D, a 12-hour version, expire in 2012 and 2017. Sanofi sued Barr over the Nasacort nasal spray in 2006.

``The proposed settlements do not contain any of the practices -- such as `reverse payments' -- that have been identified as of concern recently by the U.S. Federal Trade Commission, and Sanofi-Aventis views them as compliant with applicable law,'' the French drugmaker said in the statement.

Sanofi, while claiming it was being irreparably harmed by Teva's infringement, failed to persuade an appeals court to halt sales of the generic drug during the lawsuit.

Third-quarter sales of Allegra fell 4.1 percent from last year to $175 million, the company said Oct. 31 in a statement.

Barr License

Under today's agreements, Sanofi will grant Barr a non- exclusive license to sell generic versions of Allegra-D and Nasacort in the U.S. at a later date. The license will also grant the right to market the generic medicines before Sanofi's U.S. patents expire. Barr has an option to purchase the finished pharmaceutical product on a non-exclusive basis from Sanofi.

The settlement halts a trial in Wilmington, Delaware, in which Sanofi accused Barr of infringing two patents for Nasacort that it said produced about $300 million in annual U.S. sales. Sanofi sought an order stopping the generic-drug maker from marketing a copy of Nasacort until the patents expire in 2016. Barr claimed the patents were invalid because the technology isn't new.

Sanofi fell 1.98 euros, or 4.2 percent, to 45.47 euros in Paris trading. The stock has fallen 28 percent this year. Barr fell 75 cents to $64.29 in New York Stock Exchange composite trading at 4:15 p.m.

The cases were Aventis Pharmaceuticals Inc. v. Barr Laboratories, 01cv3627, U.S. District Court, District of New Jersey (Newark); Aventis Pharmaceuticals Inc. v. Teva Pharmaceuticals USA Inc., 06cv469, U.S. District Court, Eastern District of Texas (Marshall); and Aventis Pharmaceuticals Inc. and Sanofi-Aventis US LLC v. Barr Laboratories Inc., 06CV286, U.S. District Court, District of Delaware (Wilmington).

To contact the reporters on this story: Dermot Doherty in Geneva at ddoherty9@bloomberg.net; William McQuillen in Washington at bmcquillen@bboomberg.net.

Last Updated: November 19, 2008 16:39 EST