SOHM branches out

In late May 2010, SOHM announced that it was branching out, with a sales and marketing agreement to sell its branded generics in Uganda, Tanzania and Zambia and a purchase order for generics for distribution in the Philippines. SOHM is a relative newcomer to the generics industry; it has global headquarters located in North America but has manufacturing sites in India; the firm chose to set up its manufacturing operations in India in order to take advantage of the country's strong marketing set up, low prices and the fact that it uses English as a business language. The firm produces and markets generics with an eye on distribution in the emerging markets in Africa, Latin America and Southeast Asia. SOHM's strategy is to increase its market share in the firm's defined key markets in the emerging world, arguing that growth is shifting away from the developed markets of the United States and Europe and toward emerging markets as less developed countries prosper and spend more on healthcare.

The recently-announced Philippines purchase order is worth US$750,000, and covers primarily metformin and sildenafil citrate; a rather odd combination of a type 2 diabetes treatment and the generic form of Pfizer's Viagra, which says as much about SOHM's production capabilities as it does about medical and lifestyle conditions that are becoming increasingly profitable in the Philippines. In July 2009, the firm announced that it had received Philippine Bureau of Food and Drug Administration (BFAD) registration for generic pharmaceutical sales. SOHM was more circumspect about its new African operations, declining to name either the branded drugs at the heart of the sales and marketing agreement or the African partner it was teaming up with.

SOHM has over the past 18 months made agreements with a number of companies, and has, on the whole, been careful not to divulge too much information. In January 2009, the firm announced an exclusive private label and development agreement with an Indian firm, which it refused to name, but noted that the two firms had formed a global platform for the introduction of the SOHM brand of generics into the African, Latin American and Southeast Asian markets. Under this agreement, generics would be labelled under the SOHM brand and would be distributed directly under the firm's manufacturing licence in India. In September 2009, SOHM announced that it had launched 26 branded generics in India, adding that it had appointed two distributors in Northern India, which were again unnamed. In February this year, the firm announced it had signed another marketing agreement which would add 75 branded generics for distribution across India, taking the firm's total offerings to 135; again the name of the company it had signed the agreement with was not revealed. Around the same time, SOHM reported that it had signed a strategic alliance with an injectable manufacturing unit in India. The firm said little else, but noted that the agreement would add another 89 injectable and drops-based generics to its portfolio, bringing the total to 279. In May, the firm announced this figure had risen to 280.

Aside from generics, the SOHM has also recently announced that it has expanded its manufacturing operations in Ahmadabad, India, to include improved nutraceutical product production. A new facility will concentrate on neutracueticals, leaving the pharmaceutical manufacturing facility free to focus on generic drug orders exclusively. At the same time, the firm announced a purchase order for nutraceutical products in India valued at US$350,000.

The dollar figures SOHM is dealing in are perhaps small by the standards of most generic firms with international operations, and certainly tiny in comparison to other generic firms based in North America. The Philippine drug order and the Indian nutraceutical order have a combined value of US$1.1 million, which is a reasonable total, but far from stellar. Nonetheless, SOHM's talk is all about expansion and tapping into growing markets in previously under-represented regions. This can be seen in the firm's financial performance. In May 2010, the firm announced revenues for the first quarter ended 31st March 2010 worth US$200,324; again, tiny by international standards, but an improvement over the prior year period's US$29,598 of over 600%. Especially in the current economic climate and despite countries in North America, Europe and Japan announcing determination to increase generic spending to reduce healthcare budgets, the vast majority of generic firms around the world can only dream of increasing revenues by such an amount.

Ian Platts - Editor, World Generic Markets