Ranbaxy Laboratories Ltd. (RBXY) may sell rights to make a generic version of Pfizer Inc. (PFE)’s Lipitor, the world’s best-selling medicine, should it fail to win timely U.S. approval for the cholesterol pill, Credit Suisse AG said.

A legal settlement with Pfizer gave Ranbaxy six months’ exclusivity to market generic Lipitor in the U.S. Delays in Food and Drug Administration approval may prevent the Indian company from selling its copies as planned from Nov. 30, Credit Suisse equity analysts Edward J. Kelly and Rajat Suri said yesterday.

Lipitor is the highest-selling drug of all time, generating $10.7 billion last year. An FDA investigation into quality standards at two Ranbaxy manufacturing plants and a federal investigation into its testing practices have delayed approval of the drug copy. Federal prosecutors are negotiating a dispute settlement that may cost Ranbaxy more than $1 billion, Fortune Magazine reported in May.

“We believe the most likely outcome will involve Ranbaxy paying a hefty fine to the FDA, which would subsequently clear the path for Lipitor approval,” Kelly and Suri said in a report. “The company and most industry experts remain confident a resolution will be reached in time for Ranbaxy to launch on Nov. 30.”

Ranbaxy said it can’t comment “at this stage” in an e- mailed response to questions.

Ranbaxy, based in Gurgaon near New Delhi, is in discussions with the FDA to get approval by November and the “negotiations are progressing well,” Managing Director Arun Sawhney said on an Aug. 5 conference call.

‘Weigh on Sentiment’

“Delays in the resolution of the matter will weigh on sentiment as the date for a generic Lipitor launch approaches,” Vihari Purushothaman and Dhruva Sabharwal of Tata Securities Ltd. in Mumbai, wrote in an Aug. 5 report.

Ranbaxy fell 0.9 percent to 475.7 rupees at the 3:30 p.m. close in Mumbai. The stock has dropped 21 percent this year, compared with a 20 percent decline in the benchmark Sensitive Index.

Generic Lipitor would be a key growth driver for Ranbaxy, Deepak Malik and Ashish Thavkar of Emkay Global Financial Services Ltd. in Mumbai wrote in an Aug. 6 report. The copy may contribute $400 million to $500 million in revenue, they wrote.

“However, this gain will largely be off-set by the penalty imposed on Ranbaxy by the U.S. FDA,” Malik and Thavkar said.

Release Date

If the Nov. 30 deadline isn’t met, Ranbaxy may postpone the release of its copycat Lipitor, the Credit Suisse report said. This would also delay the timeline for other generic manufacturers wanting to sell their own copies, as Ranbaxy’s 180-day exclusivity period does not start until it begins commercial marketing, it said.

This would benefit Parsippany, New Jersey-based Watson Pharmaceuticals Inc. (WPI), which negotiated with Pfizer to begin selling a so-called authorized generic by Nov. 30.

Alternatively, Ranbaxy may waive exclusivity in exchange for payment from a rival generic-drug maker, Credit Suisse said.

“If Ranbaxy anticipates a lengthy delay, it may allow other generic manufacturers to accelerate their launches for a one-time payment or a revenue sharing agreement,” Kelly and Suri said.

Ranbaxy, 64-percent owned by Tokyo-based Daiichi Sankyo Co., received a one-time payment from Boehringer Ingelheim GmbH last year for relinquishing its 180-day exclusivity on the Flomax prostate treatment under similar circumstances, the analysts wrote.

“Daiichi Sankyo is not in a position to speculate or comment whether Ranbaxy will get approval for its Lipitor generic,” Masaya Tamae, a spokesman at the Tokyo-based Daiichi Sankyo said today by telephone.

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