Pfizer will be able to sell Lipitor, the world's bestselling drug, at full price for five months longer than expected after signing a deal with Ranbaxy, the Indian generics manufacturer.

It could mean a boost of $5 billion (£2.6billion) beyond analysts' expectations in sales of the cholesterol-lowering drug.

Ranbaxy has challenged Lipitor patents around the world as it tries to muscle in on the drug's $12.7 billion annual sales with a generic copy. Pfizer, the drugs industry giant, has been fighting challenges from Ranbaxy and others every step of the way, because it derives 26 per cent of its sales from Lipitor.

Although most of the patents covering the drug are due to expire in March 2010, Pfizer argued that Ranbaxy's copycat version would infringe two patents linked to the drug that do not expire until 2016.

Under the terms of the deal, Ranbaxy will be the first company to sell generic Lipitor in the United States, in December 2011, and will have six months as the only company allowed to do so. It will also be permitted to sell generic versions of Lipitor in Canada, Belgium, the Netherlands, Germany, Sweden, Italy and Australia when patents expire in those countries. Pfizer will stop challenging Ranbaxy sales of Lipitor generics in Malaysia, Brunei, Peru and Vietnam.

American prices of branded medicines usually fall by 20 per cent or more once the first generic version hits the market and can decrease by more than 80 per cent after other generics go on sale.

David Reid, Pfizer's acting general counsel, described the settlement as “pro-patient, pro-competitive and pro-intellectual property”.

Malvinder Mohan Singh, Ranbaxy's chief executive and managing director, said: “This comprehensively settles outstanding issues between Ranbaxy and Pfizer.” However, the deal does not end patent battles between the companies over Lipitor in Finland, Spain, Portugal, Denmark and Romania.

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax