AstraZeneca Teams Up With India’s Torrent in Generics (Update2)

March 11 (Bloomberg) -- AstraZeneca Plc agreed to market 18 of Torrent Pharmaceuticals Ltd.’s medicines in 9 emerging economies, marking the U.K. drugmaker’s first generic-drug partnership.

Under the terms of the alliance, AstraZeneca may purchase additional product licenses and enter new markets with Torrent, of India, the London-based company said in a statement today. Financial terms weren’t disclosed.

AstraZeneca, the European drugmaker most exposed to generic competition, needs new sources of revenue to replace sales lost to cheaper copies of its bestsellers. The U.K. company is using the expansion into so-called branded generics to boost sales in emerging markets to 25 percent of total revenue by 2014 as a way to cushion the loss. AstraZeneca generated 13 percent of sales from these economies last year, lagging larger competitors GlaxoSmithKline Plc and Sanofi-Aventis SA.

“Clearly, we see branded generics as a way to accelerate growth in emerging markets,” said Renaud Savary, head of AstraZeneca’s branded generics unit, in an interview before the announcement. “The products were carefully selected in therapy areas we’re strong in. We believe we can be successful in building market share and brand equity.”

Savary declined to name the Torrent products or where they will be sold for competitive reasons.

Following Peers

AstraZeneca is following U.K. peer Glaxo and Sanofi-Aventis SA of France in its foray into the growing market for lower- priced copied medicines as drugmakers seek generic-drug acquisitions and product deals to cushion the loss of sales from medicines that have lost patent protection.

Fitch estimates the world’s biggest drugmakers got 12 percent to 24 percent of their revenue in emerging markets last year.

AstraZeneca faces competition on seven drugs by 2014, three of which are its biggest sellers: Nexium for ulcers, the antipsychotic Seroquel and Crestor for cholesterol. The sales erosion may result in “a period of fluctuating earnings,” Chief Executive Officer David Brennan said in a Feb. 12 interview.

Brennan said in January that external partnerships with generic drugmakers will help to maintain the company’s “double- digit” growth in the developing world.

Torrent, based in Ahmedabad, in 2005 signed a deal with Novo Nordisk A/S to manufacture the Danish drugmaker’s insulin products in India.

Glaxo, Sanofi

Glaxo last year began a venture with Dr. Reddy’s Laboratories Ltd. to market 100 of the Indian company’s products in emerging markets, excluding India. The collaboration followed Glaxo’s agreement in May to expand a partnership with Aspen Pharmacare Ltd., supplying generic versions of the U.K. company’s medicines in South Africa.

Glaxo also paid $36.5 million for Bristol-Myers Squibb Co.’s Pakistan unit after purchasing the New York-based drugmaker’s Egyptian business in 2008 for $210 million. Glaxo agreed to buy a drug portfolio from UCB SA in Africa, the Middle East, Asia Pacific and Latin America for 515 million euros ($702 million) in January 2009.

Sanofi bought Zentiva NV of the Czech Republic, Helvepharm AG of Switzerland, Medley SA of Brazil and Laboratorios Kendrick SA of Mexico, building its offering of lower-priced medicines. The company also took control of Indian vaccine maker Shantha Biotechnics.

To contact the reporter on this story: Trista Kelley in London at tkelley2@bloomberg.net