[Ip-health] Wall Street Journal: Abbott's Thai Pact May Augur Pricing Shift

[Thiru Balasubramaniam]

http://online.wsj.com/article_print/SB117727884277678266.html

Abbott's Thai Pact May Augur Pricing Shift

By NICHOLAS ZAMISKA in Hong Kong and JAMES HOOKWAY in Bangkok
April 23, 2007; Page A3

Abbott Laboratories has backed away from a confrontation with the Thai
government over patent protection for a popular AIDS treatment, a
concession that could embolden other developing countries pushing big
drug makers to lower the price of their products.

Abbott is offering to sell the latest version of its AIDS drug Kaletra
in Thailand at a discounted rate, according to Miles D. White, Abbott's
chief executive. The move reverses Abbott's decision in February to
withhold the new form of Kaletra, called Aluvia in some countries, from
Thailand following a Thai government announcement it would allow sales
of generic versions of the drug and other branded medicines to cut
patients' costs.

"In this particular case, in the name of access for patients, we
offered to resubmit Aluvia at our new price, which is lower than any
generic, provided they wouldn't issue a compulsory license," Mr. White
said. He said the initial decision was driven by "concern that
compulsory licensing would be abused ever-more widely, using HIV as an
excuse."

Jennifer Smoter, a spokeswoman for Abbott, said Thailand's health
ministry has expressed interest in the offer, but a resolution hasn't
been reached. Abbott's move doesn't affect its decision to withhold six
other drugs from Thailand.

Abbott's turnabout could crimp growth of global drug makers, which rely
on emerging markets to compensate for slowing growth in home markets.

Gustav Ando, an analyst for Global Insight, an economic-forecasting
firm in Waltham, Mass., said, "If one country does it...any country can
do it.... It's not going to stop there."

Abbott, of Abbott Park, Ill., in February, refused to sell the country
seven of its newest drugs. The move appeared to backfire, prompting
consumer boycotts in Thailand, bringing human-rights advocates out in
support of Thailand's policy and provoking protests from some Abbott
shareholders, who argued Abbott should sell its latest drugs in
Thailand.

Thailand generated about $30 million a year in sales for Abbott, said a
person familiar with the company's sales.

In backing down, Abbott is joining Merck & Co. and Sanofi-Aventis SA,
which already have cut the prices of their AIDS and heart-disease drugs
in the hope of dissuading Thailand from switching to less-expensive
alternatives.

Thailand still could choose to import generic drugs to replace
Abbott's, however, just as it is now using generic versions of Merck's
AIDS drug Efavirenz, despite Merck's own move to lower prices.

Big drug companies have been pushing sales in emerging markets like
Thailand, in part, because of a backlash against expensive brand-name
drugs in the U.S. and other Western markets.

Merck expects revenue in emerging markets to double by 2010 to more
than $2 billion a year. Abbott's international pharmaceutical sales
totaled $1.68 billion in the first quarter of this year -- nearly as
much as its $1.69 billion in U.S. sales. In 2006, Abbott's total sales
in the U.S. dropped 7.5% to $11.5 billion, while the company's
international revenue rose nearly 11% to $10.9 billion.



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Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International (KEI)
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