A class action by New Zealand and Australian victims of the morning sickness drug thalidomide against its manufacturer has been settled for A$89 million (NZ$99m).

The settlement of the class action taken against German pharmaceutical company Grunenthal, and thalidomide's Australian distributor, Distillers, bought by British company Diageo in 1997, was announced in the Victorian Supreme Court today.



''It's been a long time coming,'' lawyer Peter Gordon told Justice David Beach.

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Gordon said the settlement had been reached after months of negotiations following a confidential multimillion-dollar settlement reached between thalidomide victim Lynette Rowe, who was born without arms and legs, and Diageo in July last year.



Rowe was in court on Monday with her parents to see other thalidomide victims finally get justice.



Gordon told the court it had been agreed that more than 100 people from Australia and New Zealand in the class action would be paid A$89 million, plus A$6.5 million in costs, subject to court approval.



The matter was adjourned to February 7 when it was expected to be formally approved.

Barry de Geest, one of New Zealand's most high-profile victims, said the settlement was great news for those that had never received compensation.

He had not been involved in the suit as it was only for those who had never been compensated.

He believed about five New Zealand victims would receive money.

Although it was a positive outcome for some of the victims, it was a bittersweet deal as it meant the separate class action against Grunenthal would be dropped.

"The fact that Grunenthal are never going to be made accountable for it, that they did this to us, that's the heartache."

He expected this to be the final chapter in the thalidomide nightmare, with victims now aged in their 50s.



In July last year Fairfax Media revealed the German drug maker ignored and covered up repeated warnings that thalidomide could damage unborn babies. Files from the Grunenthal archives exposed a 50-year global cover-up.



An estimated 10,000 babies worldwide were born with severe physical deformities because their mothers had taken thalidomide.



It was claimed the manufacturer developed, patented and brought the drug to the Australian market between 1950 and 1955 and declared the drugs "safe, non-toxic, without significant side-effects, suitable for children and babies, an effective treatment for nausea, sleeplessness and anxiety, and on which it was impossible to overdose".



The plaintiffs claimed the defendants conducted inadequate research into the safety of the drugs and failed in their duty of care to adequately warn consumers of the associated risks.



Rowe was born in 1962 after her mother, Wendy Rowe, consumed the thalidomide drugs, marketed under the brand name Distaval, for about five weeks during the first trimester of her pregnancy. It was provided to her as a sample by her doctor.



Rowe's abnormalities include no arms or legs, narrowing of the ear canals, scoliosis, eye, mouth and dental abnormalities. She also suffered brain injury due to a febrile illness before she turned one and claims she has suffered pain, shock, depression and anxiety due to the drugs.



The lead plaintiff in the separate class action settled on Monday was Janelle Wendy Robbins.



Robbins' mother took thalidomide in about mid to late 1961 during the first trimester of her pregnancy with Janelle after it had also been provided to her as a sample by her doctor.



Grunenthal received between three and 10 per cent of of the sale prices of every thalidomide drug sold by Distillers in New Zealand and Australia.



Distillers agreed not to manufacture their own thalidomide in return for a discount on bulk purchases of the Grunenthal thalidomide.

In the statement of claim lodged by Robbins' lawyers, Grunenthal knew or ought to have known by or before April 1, 1959, that in Germany since 1958 [after the introduction of thalidomide drugs in Germany in 1957] there had been a significant increase in the number of babies born with congenital malformations.