Expects the products acquired to deliver more than $200 million in annual revenue in 2013.
Pfizer Inc has agreed to license an array of generic pills and injectable medicines from India’s Aurobindo Pharma Ltd, as the world’s largest drugmaker looks to off-patent medicines for growth.
In the deal announced on Tuesday, Pfizer said it expected the products acquired to deliver more than $200 million in annual revenue in 2013, according to David Simmons, general manager of Pfizer’s established products business unit.
The products expand Pfizer’s growing generics portfolio and are versions of drugs originally made by companies other than Pfizer. Financial terms of the deal were not disclosed.
Pfizer is focusing on off-patent medicines as one avenue to spur profits, as the drugmaker encounters generic competition that threatens revenue of its own top sellers. Pfizer’s current roster of drugs that have lost patent protection amounts to $10 billion in annual sales.
“We’re committed to dramatically changing our established products portfolio from a significantly shrinking segment of the business to an engine of positive growth,” Simmons said in an interview.
Simmons previously told Reuters that Pfizer was seeking licensing arrangements to expand the generics business. The company expects more deals this year, he said.
In the Aurobindo deal, Pfizer will gain rights to 38 pills in the US and 20 in Europe, plus another 11 in France.
Pfizer declined to name the medicines, saying they covered a broad range of therapy areas, including cardiovascular disease and central nervous system disorders.
In the US, the pills will be sold through Pfizer’s Greenstone unit, which currently sells about 60-80 generics.
New York-based Pfizer also acquired US and European rights to 12 injectable antibiotics, including penicillin and cephalosporins.
Pfizer, which sells 18 injectable drugs in the US, has prioritised making licensing deals to expand its injectables business, in which it believes there are relatively few rivals and maintains it has a competitive cost structure. Simmons previously said he wants a US portfolio of 100 injectable drugs in about five years.
The agreement expands on a five-product deal for the US entered into in July 2008 with Aurobindo, with which Pfizer first worked in 2006 through its animal health division, Simmons said.
“Going forward, we plan to expand our product portfolio through additional activities with Aurobindo and other companies as well,” Simmons said.
Simmons said the deal involved strict quality controls, including allowing Pfizer to have its employees in the Aurobindo plant during production runs for Pfizer.
Pfizer’s decision to put its weight behind the quality credentials of Aurobindo is significant, as the FDA, the US drug regulator, had recently accused India’s largest drug maker, Ranbaxy, of falsifying technical data to obtain marketing approvals for medicines from one of its Indian facilities.
“We’re focused on making sure any medicine that gets sold with the Pfizer brand name on it is held to the same quality standards as our original branded products,” he said.
Some analysts question if generics fit well with pharmaceutical companies that specialise in brand-name drugs, partly because they are viewed as a lower-margin commodity business. But Simmons said the profit margins from the deal and future agreements would meet Pfizer’s standards.
“We’re not deteriorating Pfizer’s margin standards because we’re going into the off-patent market,” he said.
The sourcing agreement will ensure steady revenue flow, as it assures high volume business for Aurobindo. The product range covers central nervous system drugs to penicillin injectables. While 44 of these were meant for oral consumption, 12 were injectables, sources said.
Aurobindo is among the leading Indian firms when it comes to market approvals from the USFDA. The company has filed 145 drug approval applications in the US and got marketing approvals (including tentative approvals) for over 90 medicines.
