Biotech Values

[DewDiligence]

Glaxo Inks Collaboration to Commercialize Generic Drugs

[Borrowing a page from NVS’ business model.]

http://www.reuters.com/article/marketsNews/idUKL2388140620080723

›Glaxo enters branded generics market with Aspen

Wed Jul 23, 2008 3:38am EDT

LONDON (Reuters) - GlaxoSmithKline Plc (GSK), the world's second largest drugmaker, took a bold step in the branded generics marketplace on Wednesday via an alliance with South Africa's Aspen Pharmacare Holdings.

The move is the latest sign of Glaxo diversifying the focus of its business to new markets in the face of tough conditions for patented drugs in the United States and Western Europe.

Under the terms of the deal -- which Glaxo hopes will drive its growth in emerging markets -- the British-based group gains access to a broad range of low-cost branded but unpatented medicines.

Glaxo will register these products in markets where they have not already been approved and expects to commercialize the first of them from 2010 onwards. Aspen will continue to market these products in sub-Saharan Africa and some other countries.

Aspen will get certain limited upfront payments from Glaxo but the majority of payments will be made via a profit-sharing arrangement based on actual sales.

The tie-up marks a break from Glaxo's past strategy of concentrating on high-priced patented drugs and reflects the growing importance of emerging markets to the pharmaceuticals industry as sales in developed markets stall.

Chief Executive Andrew Witty, who took over in May, is expected to outline his overall strategic vision for the British-based group when he presents second-quarter results at 1100 GMT (7 a.m. EDT) on Wednesday.‹


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