AstraZeneca enters generics agreement with Torrent Pharmaceuticals

AstraZeneca has announced that it has entered into a licence and supply agreement with India's Torrent Pharmaceuticals. The firm has been vague on details, but said that the agreement would cover 18 products in nine countries, with the option to expand the agreement to cover more products and more countries. The countries are described as being emerging markets, which AstraZeneca believes will contribute around 70% of pharmaceutical industry growth in the next five years. The firm added that branded generics in these markets account for around 50% by value. The agreement will see Torrent manufacture and supply a portfolio of generics to AstraZeneca for which Torrent already has licences.

Exactly which countries AstraZeneca is referring to as emerging markets is open to debate, but Torrent claims a presence in a number of markets around the world. Included in these are African operations, including Zimbabwe, Kenya, Uganda, Nigeria, Ghana and South Africa. The firm claims it has 355 product registrations covering 14 countries in Africa, where it has seen revenues double since 1999/2000. Torrent also has made inroads into the Middle East, entering an agreement with a local producer in Saudi Arabia, and gaining approvals in Kuwait, Oman and Libya. The firm also has an eye on other markets in the Middle East, including Egypt, Syria and Jordan. Operations in Asia include a presence in Sri Lanka, Vietnam, Burma and the Philippines. Torrent also has a subsidiary in Brazil. Clearly, Torrent has developed a strategy of establishing commercial operations in the parts of the world that can be considered as emerging markets, which AstraZeneca will be well placed to exploit.

In making this agreement with Torrent, AstraZeneca is following in the footsteps of other large multinational innovator companies. Most notable in recent months has been Pfizer, which has entered into a series of agreements with Indian generic firms, similarly to AstraZeneca's tie-up with Torrent. Pfizer's agreements are the result of something of a change of heart for the firm, which until recently has been staunchly anti-generic in its outlook, despite the generally down-played existence of its Greenstone subsidiary, which produces generics. The firm has developed an Established Products Business Unit, specifically set up to exploit the international demand for generics; the shift in Pfizer's thinking perhaps underscoring the financial difficulties being faced by large innovator firms during globally economically constrained times.

Perhaps this is also the basis for AstraZeneca's similar change of heart. AstraZeneca has a stated aim to increase its penetration of emerging markets, although this is not specifically through generics. As with Pfizer, AstraZeneca's relationship with the generic industry has been somewhat fraught up until now. The firm's bitterly-fought battle to keep generic omeprazole off the global markets for as long as possible at the turn of the current century was something of a case study in aggressive legal tactics and market manipulation, and AstraZeneca was able to stave off the inevitable, and prolong its monopoly on the drug for some time past the expiration of the basic patents. The firm has not had a generics subsidiary, but has often reached settlements with generic firms in patent challenges, and in recent years has also fought generic competition by entering into authorised generic agreements, taking advantage of an issue that has split the generics industry in the United States. This latest agreement, linking the firm with a generic manufacturer, coupled with Pfizer's similar recent moves, perhaps reveals a sea-change in outlook for the branded industry.

Ian Platts – Editor, World Generic Markets