July 13 (Bloomberg) -- Sun Pharmaceutical Industries Ltd. rose the most in three weeks after it reached an agreement with Forest Laboratories Inc. to drop a lawsuit challenging patents on the antidepressant Lexapro.

Sun Pharmaceutical, India’s most valuable drugmaker, rose 2.8 percent to 1,146.35 rupees, the second-biggest gainer on the Bombay Stock Exchange’s Sensitive Index, or Sensex. The measure fell 0.8 percent.

Sun Pharmaceutical’s unit Caraco Pharmaceuticals was using the lawsuit to try to enter the market after Teva Pharmaceuticals Industries Ltd. failed in its effort to invalidate one of the patents, which expires in 2012 and covers the drug’s main compound, escitalopram. The patents are licensed to Forest by Danish drugmaker H. Lundbeck A/S, which also signed the agreement.

As part of the settlement, Detroit-based Caraco will get a license to the Lexapro patents once a third party enters the market, unless that other company was given a six-month period of exclusivity by the U.S. Food and Drug Administration, Forest said in a statement.

To contact the reporters on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net

Last Updated: July 13, 2009 07:58 EDT