Bristol-Myers Squibb (BMY -0.72%) is granting Dr. Reddy's Laboratories (RDY -0.11%) a volume-limited license to produce a generic version of its blockbuster multiple myeloma drug, Revlimid, beginning in 2022.

Previously, Bristol-Myers filed a patent-infringement lawsuit against Dr. Reddy's in an attempt to prevent the healthcare company from launching its generic version of Revlimid. In the second quarter, Revlimid produced $2.9 billion in revenue for Bristol-Myers.

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The newly inked agreement gives Dr. Reddy's the right to produce a limited amount of Revlimid beginning on an undisclosed date following March 2022, when an agreement with another generic drugmaker -- Natco -- kicks in. Restrictions limiting Dr. Reddy's production volume disappear on January 31, 2026.

The agreement allows Bristol-Myers to control how quickly Revlimid's revenue declines following its patent expiration, while also removing costs and uncertainty relating to Bristol-Myers litigation. Bristol-Myers acquired Revlimid when it bought Celgene in 2019 for approximately $74 billion.

There are over 32,000 patients diagnosed with multiple myeloma annually in the United States, making it the second most common blood cancer in the country.