Astra boosts generic exposure with Torrent deal
AstraZeneca PLC announced a supply partnership with India's Torrent Pharmaceuticals on Thursday, its first such link with a generic drugmaker as it seeks to boost its presence in emerging markets and counter patent losses on blockbuster medicines.
Under the deal, Torrent will supply AstraZeneca with a portfolio of 18 generic medicines, copies of previously patented medicines, which the Anglo-Swiss drugmaker will then brand and market in nine countries.
Financial terms of the deal were not disclosed.
AstraZeneca has been slower than some other pharmaceutical companies to jump on the generics bandwagon as the industry faces a watershed thanks to patent expirations.
Generics are the big sellers in emerging markets, which are expected to contribute around 70 percent of industry growth over the next five years. Branded generics represent around 50 percent by value in those emerging markets.
While GlaxoSmithKline already sells some of its own medicines in emerging markets, the deal with Torrent is the first of its kind for AstraZeneca.
It follows similar branded generic supply deals struck by GlaxoSmithKline PLC with India's Dr. Reddy's and South Africa's Aspen and by Sanofi-Aventis with Brazil's Medley.
"In markets where consumers and physicians have a strong preference for trusted brands, we believe AstraZeneca's long-standing reputation for quality is a sustainable competitive advantage," said Tony Zook, head of AstraZeneca's global commercial organization.
"Working in partnership with Torrent will extend the range of branded medicines we can offer to patients in emerging markets, where we see continuing opportunities for our business to grow," he added.
The company said it planned to extend the portfolio beyond the initial 18 products, but gave no time frame.
Shore Capital noted that while AstraZeneca was slower to capitalize on opportunities in emerging markets than some of its peers, it now generates around 13 percent of annual revenue there. The company is looking to increase that to 25 percent by 2014.
Patents on seven of its drugs will expire in the next four years, including its three best sellers — ulcer treatment Nexium, anti-pyschotic Seroquel and anti-cholesterol drug Crestor.
AstraZeneca last month announced plans to ax 8,000 more jobs, or 12 percent of its work force, by 2014 to cut costs after disappointing fourth quarter earnings.
The company's shares were down 0.5 percent at 2,934.5 pence ($44.14) on an overall lower London Stock Exchange.