The deal will allow Teva, the world’s biggest manufacturer of generic pharmaceuticals, to start selling a cheaper copy of Nexium when the first patent expires in 2014.
However, under a previous arrangement, Indian firm Ranbaxy will be able to sell a generic version exclusively for 180 days before Teva begins.
Nexium is AstraZeneca’s highest-selling drug, with sales of £1.3bn in the nine months to September.
A spokesperson said: “This settlement strikes an appropriate balance between protecting the value of our shareholders’ investment in Nexium, mitigating uncertainties and addressing the many other costs associated with patent litigation.”
AstraZeneca shares closed 1.3 per cent up at £29.11.