Valeant Pharmaceuticals International's discussions to acquire Actavis, the world's third-largest generics drugmaker, have reportedly broken down.

The latest reports come after The Wall Street Journal originally broke the story citing "people familiar with the matter" that the two companies had been working towards an all-stock $13 billion deal when some of Actavis's directors came out against it last week. However, the newspaper reported that executives on the two sides are still working to resurrect an agreement which would be presented as a merger of equals, and carry a small premium for Actavis shareholders.

The new-look Actavis was only set up in January, after the USA's Watson Pharmaceuticals acquired the Switzerland-based group (and adopted its name) for $5.60 billion. Its market capitalisation is in the region of $13 billion.

The WSJ noted that a spokesman for Actavis declined to comment but a Valeant spokeswoman was a bit more receptive, telling the newspaper that "we're a very acquisitive company and we look at lots of different companies". The Canadian drugmaker has been involved in a wide range of deals over the last few years and is in the process of acquiring dermatology specialist Obagi Medical Products for just shy of $418 million.

Actavis settles OxyContin patent battle with Purdue

Meantime, one definite done-deal has seen Actavis settle a patent- infringement lawsuit involving its generic version of generic version of Purdue Pharma's abuse-deterrent formulation of the painkiller OxyContin (oxycodone).

The settlement comes just after the US Food and Drug Administration banned generic versions of OxyContin that do not use abuse-resistant technology. Now, Actavis will be licensed to market "a specified number of bottles" of its generic OxyContin beginning on January 1, 2014, if it gets final approval from the agency.

Alternatively, if Actavis is unable to gain FDA approval of its version prior to September 1, 2014, the company will be permitted to launch an authorised generic of Purdue's abuse-deterrent product. Actavis said the agreement will represent more than $100 million in combined gross profit in 2014 and 2015, more heavily weighted to 2014. Other terms were not disclosed.

OxyContin had US sales of about $2.8 billion for the year ending January 31, 2013 according to IMS Health.