Lynette Rowe, 50, is leading a mass lawsuit on behalf of people born in Australia and New Zealand with congenital defects as a result of their mothers taking the German-made sedative thalidomide, between 1958-1970.
Rowe was born with no arms or legs, which she claims was caused by her mother taking the drug - which is known in German as Contergan. She is suing Grünenthal and Diageo, which took control of British-based distributor The Distillers Company in 1997.
Grünenthal, Rowe claims, saw Australia as a priority market for thalidomide and "flooded" it with the morning sickness drug, with eight million tablets on the shelves by the time investigators finally linked it to birth injuries.
The pharmaceutical giant issued a statement saying it regretted "the consequences of the thalidomide tragedy", but believed it acted responsibly in development of the drug and would "fully defend" any legal action.
And while lawyers told the Supreme Court in Victoria state that Rowe had reached a confidential settlement in her case with Diageo on Wednesday, the case against Grünenthal continues and may well be pushed back until August 2013 so that any final claimants can come forward.
Diageo agreed to pay a "multi-million dollar amount," which would be “sufficient to provide a very good level of care for Lyn for the rest of her life," said Rowe's lawyer, Peter Gordon.
Rowe has been cared for by her, now elderly, parents around the clock since she was born. The result, Gordon said, showed compassion.
Diageo had also agreed to negotiate with other claimants in the case, in which Gordon's firm said it had been contacted by "over 100 people" including two claims that were now "well advanced."
But Grünethal have been less cooperative, another lawyer on Rowe's team, Michael Magazanik, said, claiming that they had "refused to contribute to the settlement."
"The facts about Grünenthal and thalidomide need to come out," Magazanik said.
"Grünenthal never tested the drug on pregnant animals or followed up its effect in pregnant women, yet assured doctors the drug was exceptionally safe."
In the statement Grünenthal said that it "maintains that its actions were consistent with the state of scientific knowledge and the prevailing standards for pre-marketing and testing of the pharmaceutical industry in the 1950s," it said.
Rowe wept as the settlement was announced in court, saying it proved that "you don't need arms and legs to change the world," and her parents Ian and Wendy expressed pride in their daughter's fighting spirit.
"Those pills that Wendy and thousands of other women took 50 years ago have caused so much heartache and suffering, but at least something positive is now being done to put some things right," said Rowe's father.
Thalidomide was launched in the late 1950s and sold in nearly 50 countries before being withdrawn when babies began showing severe side effects from the drug, including the absence of arms and legs.
An estimated 10,000 children worldwide were born with deformities as a result of their mothers taking the drug. Gordon described it as "the greatest pharmaceutical disaster in history."