[Ip-health] Financial Times: GSK in generic drug alliance

[Thiru Balasubramaniam]

http://www.ft.com/cms/s/0/b228c9d8-59df-11de-b687-00144feabdc0.html

GSK in generic drug alliance

By Gill Plimmer in London

Published: June 15 2009 22:05 | Last updated: June 15 2009 22:05

GlaxoSmithKline on Monday stepped up its expansion into emerging
markets, striking an alliance to sell more than 100 drugs of Dr
Reddy=92s, the Indian generic pharmaceuticals maker, in Africa, the
Middle East, the Asia Pacific and Latin America.

The move marks intensifying interest by pharmaceutical companies in
expanding into generics as their medicines go off patent. With sales
growth in the US and Europe flagging, drugs companies are competing to
expand in emerging markets where selling large volumes at lower prices
is more important.

The GSK deal, effective immediately, gives the company access to Dr
Reddy=92s portfolio and future pipeline of more than 100 branded
pharmaceuticals in areas such as cardiovascular, diabetes, oncology,
gastroenterology and pain management.

Navid Malik, analyst at Matrix Corp, said the deal was likely to
signal a wave of further deals. =93This gives Glaxo instant
gratification,=94 he said. =93It generates sales immediately and allows
GSK to expand in emerging markets with a ready made mix of products.=94

Seven emerging nations =96 Brazil, Russia, India, China, Korea, Mexico
and Turkey =96 could account for 70 per cent of pharma sales growth by
2020, according to a study by UBS. Rising incomes and ageing
populations in poorer countries also mean more people are suffering
from rich country diseases such as cancer.

Last month, GSK struck a similar $389m deal to acquire a 16 per cent
stake in South Africa=92s Aspen Pharmacare.

Last week it also agreed to create a joint venture flu vaccine
business in China. It will combine forces with Shenzhen Neptunus,
which is quoted in Hong Kong, taking an initial 40 per cent stake for
=A321m ($34m) with the prospect of increasing to majority control within
two years.

Pfizer, the world=92s largest pharmaceuticals company, has also stepped
up its presence in generics, agreeing licensing deals with India=92s
Auro-bindo and Claris Lifesciences.

The latest GSK agreement does not involve any cash payment or equity
stake. Revenues will be reported by Glaxo and shared with Dr Reddy=92s
under terms that the companies are not disclosing. In some undisclosed
markets, Dr Reddy=92s and GSK will co-market drugs.

Abbas Hussain, president of emerging markets at GlaxoSmithKline, said:
=93This is another significant step forward in our strategy to grow and
diversify GSK=92s business in emerging markets. Growth in both
population and economic prosperity is leading to increased demand for
branded pharmaceuticals.=94

Copyright The Financial Times Limited 2009

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


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