[Ip-health] Dow Jones: GlaxoSmithKline, Dr Reddy's In Pdt Develop, Rev Pact

[Thiru Balasubramaniam]

http://online.wsj.com/article/BT-CO-20090615-710253.html#printMode

     * JUNE 15, 2009, 11:09 A.M. ET

UPDATE: GlaxoSmithKline, Dr Reddy's In Pdt Develop, Rev Pact



    By Rumman Ahmed and Sten Stovall
    Of DOW JONES NEWSWIRES


BANGALORE (Dow Jones)--Indian drug maker Dr. Reddy's Laboratories Ltd.
(RDY) and U.K.-based GlaxoSmithKline PLC (GSK) Monday announced a
partnership to develop and sell selected products across emerging
markets, excluding India, with immediate effect.

The pact is Glaxo's latest move in building its business in emerging
markets, giving it exclusive access to Dr. Reddy's portfolio and
future pipeline of more than 100 branded pharmaceuticals in
therapeutic segments such as cardiovascular, diabetes, oncology,
gastroenterology and pain management.

GlaxoSmithKline under its new CEO Andrew Witty has overhauled its
strategy, diversifying its operations to boost growth and reduce risk
amid the toughest business environment for the pharmaceutical sector
in decades.

As a result, the world's second-largest drug maker by sales has been
divesting a number of non-core products, while drug discovery is being
reorganized into small teams of scientists.

Last month, GlaxoSmithKline agreed to acquire a 16% stake in South
Africa's Aspen Pharmacare Holdings Ltd. (APN.JO) in a deal valued at
about $389 million, expanding an already-existing partnership with the
maker of generic drugs.

And last week, Glaxo agreed a deal with Shenzhen Neptunus Interlong
Bio-Technique Co. to make influenza vaccines for China.

Navid Malik of Matrix Corp in London said Glaxo's deal with Dr Reddy's
is clever, "as there's little risk taken, it generates sales
immediately and builds on the duo's R&D relationship and allows GSK
expand in emerging markets with a ready made mix of products."

The alliance also helps Dr. Reddy's, which rejigged its global
generics business earlier this year. The Indian drugmaker said it will
exit from some of the very small, distributor-driven markets for its
generic drugs.

"It's a value-added partnership opportunity because it's more of a
revenue-sharing arrangement," Managing Director Satish Reddy later
told Dow Jones Newswires.

Reddy said the deal not only gives Dr Reddy's access to emerging
markets where the company has decided not to expand but also helps it
maximize the value of its portfolio.

Under the agreement, products will be manufactured by Dr. Reddy's and
licensed and supplied by Glaxo in various countries in Africa, the
Middle East, Asia Pacific and Latin America.

In certain markets, products will be co-marketed by GlaxoSmithKline
and Dr. Reddy's.

Under the terms of the agreement, revenues will be reported by Glaxo
and shared with Dr. Reddy's as per the agreed terms. The companies
declined to give details of the revenue-sharing arrangement.

Glaxo shares at 1500 GMT stood at 1,096 pence in London, down 1.7% on
Friday's close but up 2% from year-ago levels.

Dr Reddy's shares, which closed before the pact was announced, ended
Monday trading at INR710.50 in Bombay, up 0.8% on the day but down
2.5% from 12 months ago.

-By Rumman Ahmed and Sten Stovall, Dow Jones Newswires; 91-9845104173; rumman.ahmed@dowjones.com

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Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International (KEI)
thiru@keionline.org


Tel: +41 22 791 6727
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