Biotech Values

[DewDiligence]

Did anyone wonder who is going to supply the “branded generic” drugs
Big Pharma is increasingly interested in selling to emerging markets?
The answer is: companies like Cipla.

http://www.reuters.com/article/idCNTOE6030A420100104

›India’s Cipla in Drug Supply Talks with GSK, Teva

Jan 4 2010
By Farah Master

HONG KONG, Jan 4 (Reuters) - Indian drug maker Cipla Ltd <CIPL.BO> is in talks with drug companies including GlaxoSmithKline <GSK.L> and Israel's Teva <TEVA.TA> to supply generic drugs, its chairman said on Monday.

Cipla, India's second-largest pharmaceutical company by market value, has been in negotiations with GlaxoSmithKline for six months, Yusuf Hamied, also managing director, told Reuters in an interview.

"It may be specifically for one or two products -- it is not a down-the-line drug deal," said Hamied. He also said there was "not a chance" that Cipla was in talks to sell a stake to a partner company.

In December Cipla had said it was in talks with a number of global drugmakers including Pfizer Inc <PFE.N> to supply generic products.

Hamied also confirmed recent reports that Cipla was in supply talks with German drugmaker Boehringer Ingelheim.

Global drug makers such as GlaxoSmithKline and Pfizer are increasingly looking to low-cost destinations like India to tie up supplies as they battle falling prices and increasing generic competition.

Cipla, with a market value of $5.5 billion, is one of the world's biggest producers of low-cost antiretroviral drugs to fight HIV and AIDS. The company provides AIDS drugs to African companies for just $350 per year patient compared with $10,000 charged by multinationals.

Hamied, who holds a doctorate in chemistry from Cambridge University, said Cipla would launch between 50 to 100 different products this year, including veterinary drugs and agrochemicals. The company exports to 183 countries including Hong Kong, where one of its biggest customers is the Hong Kong Jockey club, which buys drugs for race horses.

Shares in Cipla, which have gained 76 percent over the past year, closed 0.42 percent higher at 337 rupees on Monday.

Hamied said Cipla's expected revenue to ending March 2010 was $1.1 billion.

INTELLECTUAL PROPERTY WOES

Demand for generic drugs from Indian producers such as Cipla, Dr Reddy's Laboratories <REDY.BO> and Ranbaxy Laboratories <RANB.BO> is booming as nations battle rising healthcare costs.

But Hamied said that WTO regulations, which since 2005 have prevented Indian generic drug firms from copying patented drugs, mean Indian generic companies have to change their business model or risk being swallowed up by multinational firms.

Cipla said it was in negotiations for in-licensing agreements -- where foreign companies can sell their products through Cipla -- with at least two Japanese companies. "This is going to increase a lot in India," as generic drug companies look for other business models, said Hamied.

Hamied said negotiations between multinationals and the World Health Organisation (WHO) for a voluntary patent mechanism -- where selected patents for HIV and other disease treatments are put in a pool for generic companies to imitate -- are making no headway.

"The multinationals don't want China, India or Brazil in the pool. So who is going to manufacture the raw materials?" said the Mumbai-born Hamied. "They have not involved any generic producers in the talks. All they are doing is delay, delay, delay."‹