Earlier this month, Par settled a lawsuit with Johnson & Johnson
Considering the lopsided settlement, Par's lawyers must have thought that the company was going to lose. The royalty payments agreed to are probably less than the court would have assigned if Par had lost.
Last November, Par and partner Spectrum Pharmaceuticals
Par has also been able to avoid lawsuits altogether by licensing the right to market the generic drug. Also in November, it reached an agreement with AstraZeneca
Avoiding court by settling lawsuits and licensing products can be a good way for a generic drugmaker to get to market quicker and save court costs, but Par seems to be a little quick to the negotiating table recently. It's possible Par just got into a couple of bad situations and decided to get out without taking the risk of losing even more in a court judgment. But patent lawyers are the lifeblood of a generic drugmaker, and investors should want them to act as aggressively as possible so that Par can expand its product line.
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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Johnson & Johnson and GlaxoSmithKline are Income Investor recommendations. The Fool's disclosure policy is rock solid.