Print“The move is a growing necessity as competitors to both companies jockey for position in the branded generics market, which is expected to account for at least half the value of new revenue opportunities in emerging markets.”
Pfizer and Zhejiang Hisun Pharmaceutical have taken a step closer to cementing plans to establish a joint venture to develop, manufacture, and commercialize off-patent pharmaceutical products in China and global markets, where such medicines account for a growing slice of the market.
A framework agreement signed by the companies during future Chinese president Xi Jinping’s visit to the United States laid the groundwork for the new company, to be called Hisun Pfizer Pharmaceutical. Pending Chinese government approval, Hisun will contribute $295 million for a 51 percent ownership stake, while Pfizer will commit $250 million for the remaining 49 percent. Both companies can contribute selected products, manufacturing sites, cash, and assets.
The move is a growing necessity as competitors to both companies jockey for position in the branded generics market, which is expected to account for at least half the value of new revenue opportunities in emerging markets. Pfizer has already made significant commitments to develop branded generic medicines in Brazil, where it spent $240 million to take a 40 percent stake in Laboratorio Teuto Brasileiro in October 2010.
In May 2009, the company announced an expansion of its licensing agreements with Aurobindo Pharma, acquiring rights to 60 products in more than 70 emerging market countries. The medicines included antibiotics and anti-infectives, and cover a broad range of disease areas like cardiovascular and central nervous system disorders, something which former president and general manager of Pfizer’s Emerging Markets Business Unit, Jean-Michel Halfon, called at the time “a foundation” for the company’s commercialization of branded generics.
Abbott, AstraZeneca, and Sanofi have all sought to better position themselves to take advantage of the opportunities presented by branded generics too. In 2011, Abbott created an established products business, Merck made a branded generics-focused deal with India’s Sun Pharma and AstraZeneca in 2010 established a license and supply agreement with India’s Torrent Pharmaceuticals, as well as one with Aurobindo that is similar to Pfizer’s arrangement with that company.
“The emerging markets are forecast to contribute around 70 percent of pharmaceutical industry growth in the next five years,” AstraZeneca claimed in March 2010, “and branded generics represent approximately 50 percent by value in these emerging markets.”
Drug sales in China, the world’s third largest pharmaceutical market, were expected to reach more than $50 billion in 2011, according to IMS Health, But while China is the main focus in the Pfizer-Hisun deal, Pfizer could clearly use the venture as a base on which to extend its branded generic business to India and other Asia-Pacific markets, an overall pharmaceutical market that could reach as much as $274.8 billion in value by the end of 2015, suggests Datamonitor.
A branded generic version of Lipitor is one likely offering for Pfizer’s newest joint venture. But with patents expiring on Viagra, Celebrex, and Detrol, among others due to expire in the next few years, establishing the groundwork to transition brand name drugs to branded generics is likely a strategic necessity.
February 24, 2012
http://www.burrillreport.com/article-pfizer_and_hisun_near_joint_venture_pact.html
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