NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  

Rediff News  All News  » Business » Pharma cos in deals to expand product basket

Pharma cos in deals to expand product basket

October 23, 2006 09:48 IST

With marketing licence deals being struck virtually every week in the Indian pharmaceutical sector in the last few months and more in the offing, Indian companies are gearing up to strengthen their product basket without incurring expenses on research.

The international licensers, on their part, penetrate a new market using the licensees' distribution network and get a fixed revenue share, while making no investment at all.

Both big and mid-sizes players have been on a signing frenzy to market generic versions of drugs in India as well as in the developed markets of the US and Canada. 

Ranbaxy Laboratories leads the pack with seven deals in the last six months, followed by Panacea, Torrent, Lupin, Hetero Drugs and Strides Arcolab.

"In-licensing was always a big opportunity in the post-product patent regime, but it is only now that international pharma has begun striking a strategic relationship with Indian companies," said Sanjiv Kaul, managing director, ChrysCapital.

Analysts said this could be a sign of things to come, with in-licensing or "contract sales" becoming the third plank of the outsourcing boom -- "contract manufacturing" and "contract research" being the other ones.

For now, this model was creating a win-win situation through which licensees like Ranbaxy, Lupin and Torrent could leverage their distribution network in the country and augment their product basket, while the innovators garnered the licence fee, Kaul added.

"The licenser can enter a market without incurring costs on marketing fieldforce, while for Ranbaxy it adds to the existing pipeline. There are several new opportunities for collaboration in technology and a marketing licence is just one of the many strategies for growth," explained Malvinder Singh, managing director & chief executive officer, Ranbaxy Laboratories Ltd.

Licensing of drugs and their introduction in a new market entails a minimum risk as compared with adding of products through research.

"It also keeps all intellectual property issues at bay," commented a sector expert who felt that such collaborations were signs of maturing of a patent regime that had ruled out reverse engineering as a way of expanding product baskets.

"The purpose is to leverage strengths in finance, marketing or research expertise rather than hedging risk. We will be looking at three more such deals," said Rajesh Jain, joint managing director, Panacea Biotec.

Merck, Sharpe & Dohme, a subsidiary of the US-based Merck, might also consider granting marketing licenses on a case-by-case basis, stated Leonard Tauro, its managing director.

However, adding products through licensing agreements cannot be a substitute for in-house drug research for long-term growth. "It is beneficial but it cannot guarantee future growth momentum. It is going to be an important modus operandi but just one of the many. Over time, the companies will have to bring out proprietary products from their own labs," said Kaul.

Deal Street

  • Ranbaxy has entered into marketing licence agreements for two products with Janssen-Ortho Inc in the Canadian market; with Invagen Pharmaceuticals Inc for anti-epileptic drug zonisamide in the US market; with Hyderabad-based Zenotech Labs for its 11 oncology formulations in the US and Canadian markets; Gilead for ARV Tenofovir; with Ethypharm LL India for Tramadol 50 mg and Eurodrug Laboratories for Doxophylline in the Indian market.
  • Gilead Sciences, besides Ranbaxy, has signed up agreements with seven Indian companies for Tenofovir and is scouting for more.
  • Ahmedabad-based Torrent Pharma has tied up with Chinese company Tasly to exclusively market Cardio-tonic pill in India; has indicated that more will follow.
  • Panacea Biotec has a measles vaccine by Indonesian PT Bio Farma, a veterinary vaccine of National Research Development Corporation and with Netherlands Vaccin Instituut for polio vaccines; at least three more deals in the offing.
  • Lupin will be marketing ItalFarmaco's cardiovascular product, Enoxaparin Sodium Injection, in India.
  • Merck Sharpe & Dohme might consider out-licensing its products on a case-to-case basis.
Bhuma Shrivastava in New Delhi