April 11 (Reuters) - A U.S. appeals court on Thursday

affirmed a decision for Bausch Health ( BHC ) that barred rival

drugmaker Alvogen from marketing a proposed generic version of

Bausch's diarrhea treatment Xifaxan until 2029.

A Delaware federal court had determined that Alvogen

subsidiary Norwich Pharmaceuticals' generic would infringe

patents owned by Bausch's Salix Pharmaceuticals. It blocked the

U.S. Food and Drug Administration from approving the generic

until the last Xifaxan U.S. patent expires in October 2029.

Representatives for Bausch and Alvogen did not immediately

respond to requests for comment on the decision.

Bausch has said the litigation could affect its plans to

spin off its eye-care business Bausch + Lomb ( BLCO ). Analysts at

Jefferies said on Thursday that the decision removes a "key

barrier" for the spinoff.

Bausch has separately agreed to allow Xifaxan generics from

Teva Pharmaceuticals, Sun Pharmaceuticals and

Sandoz starting in 2028 after settling related patent

disputes.

Xifaxan is approved to treat traveler's diarrhea and

irritable bowel syndrome (IBS) and can be used to prevent the

liver-related brain disorder hepatic encephalopathy (HE).

Salix sued Norwich for patent infringement over its proposed

generic in 2020. A Delaware federal judge determined in 2022

that the generic would infringe three Salix patents related to

treating HE while declaring other Salix patents invalid.

Norwich asked the U.S. Court of Appeals for the Federal

Circuit to reverse the district court's decision to block its

generic based on the infringement, while Salix appealed the

decision to invalidate its other patents.

The FDA tentatively approved Norwich's generic last year but

declined to grant its final approval because of the Delaware

court order.

Norwich has also appealed a loss in a separate lawsuit in

Washington, D.C. federal court, where it sought to force the FDA

to fully approve its drug.