European multinational AstraZeneca today announced an out-of-court settlement with Ranbaxy on a pending patent infringement litigation on its heartburn medicine esomeprazole. Sold under the brand name Nexium, esomeprazole is the second largest selling drug in USA with total annual market sales of $5.5 billion. The agreement will permit Ranbaxy to commence exclusive sales of a low-cost version of esomeorazole for 180 days from May 27, 2014, the date on which AstraZeneca's key patent on Nexium expires.
The deal, which could bring in revenues worth $1.25 million to $1.5 million for Ranbaxy over a period of six years, allows Ranbaxy to supply raw materials (bulk drugs) for the manufacture of Nexium to AstraZeneca from May 2009 and manufacture a portion of AstraZeneca's US supply of Nexium from May 2010. The firms have also entered into agreements designating Ranbaxy as the US distributor for authorised generic versions of Plendil (felodipine) and 40mg Prilosec (omeprazole).
In return, Ranbaxy has acknowledged that all six patents on Nexium asserted by AstraZeneca in the patent litigation are valid and enforceable. AstraZeneca has stated that Nexium have expiration dates that range from 2014 through 2019.
"The agreement has provided certainty to the launch of our generic version of Nexium in the US market. This is the second out-of-court settlement for Ranbaxy in 2008 and the fifth such settlement in last two years," Malvinder Mohan Singh, CEO and Managing Director, Ranbaxy said.
Ranbaxy and AstraZeneca have filed a Consent Judgment with the US District Court for the District of New Jersey reflecting the terms of the settlement agreement.
Though the litigation with Ranbaxy has been settled, AstraZeneca will continue Nexium patent infringement litigations against other generic players Teva/IVAX and Dr Reddy's Laboratories.
Ranbaxy had on February 7, 2008 said that it received tentative approval from the US Food and Drug Administration (USFDA) for marketing esomeprazole magnesium delayed-release capsules, 20 mg (base) and 40 mg (base). The agreement settles a three year old the patent infringement litigation filed by AstraZeneca following Ranbaxy's submission to the USFDA for marketing approval of a low cost version of Nexium.
Ranbaxy stock prices at BSE rose 8.62 per cent or Rs 38.25 to close at Rs 481.8 today.
Understanding Short Term Trading
Before I begin, this blog is not for intraday traders. My definition of short term implies duration of around 2 to 3 months.
Short Term stock picking is no rocket science, but rather a visual interpretation of technical charts. A basic moving average on a time frame chart will show the direction of the securities movement.
Moving averages is a mathematical results calculated by averaging a number of past data points. Moving averages (MA) in it's basic form is calculated by taking the arithmetic mean of a given set of values on a rolling window of timeframe. Once the value of MA has been calculated, they are plotted onto a chart and then connected to create a moving average line. Typical moving averages used for short term trading are 50 MA and 100 MA.
Types of Moving Averages
1) Simple Moving Average (SMA)
SMA is calculated by taking the arithmetic mean of a given set of values on a rolling window of timeframe. The usefulness of the SMA is limited because each point in the data series is weighted the same, regardless of where it occurs in the sequence. Critics argue that the most recent data is more significant than the older data and should have a greater influence on the final result.
2) Exponential Moving Average (EMA)
EMA overcomes the limits of SMA, where more weight is given to the recent prices in an attempt to make it more responsive to new information. When calculating the first point of the EMA, we may notice that there is no value available to use as the previous EMA. This small problem can be solved by starting the calculation with a simple moving average and continuing on with calculating the EMA.
The primary functions of a moving average is to identify trends and reversals, measure the strength of an asset's momentum and determine potential areas where an asset will find support or resistance. Moving averages are lagging indicator, which means they do not predict new trend, but confirm trends once they have been established.
A stock is deemed to be in an uptrend when the price is above a moving average and the average is sloping upward. Conversely, a trader will use a price below a downward sloping average to confirm a downtrend. Many traders will only consider holding a long position in an asset when the price is trading above a moving average.
In general, short-term momentum can be gauged by looking at moving averages that focus on time periods of 50 days or less. Looking at moving averages that are created with a period of 50 to 100 days is generally regarded as a good measure of medium-term momentum. Finally, any moving average that uses 100 days or more in the calculation can be used as a measure of long-term momentum.
Support, resistence and stoploss can be infered by referring the closet MA below or above the market price. The other factor that is used in short term momentum is the trading volume. The moving averages along with the trading volume can provide a better insight to short term movement.
Markets are moved by their largest participants - I believe this is the single most important principle in short-term trading. Accordingly, I track the presence of large traders by determining how much volume is in the market and how that compares to average. Because volume correlates very highly with volatility, the market's relative volume helps you determine the amount of movement likely at any given time frame--and it helps you handicap the odds of trending vs. remaining slow and range bound.
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