Abbott Licenses Cadila Generics in Greater Push Toward Emerging Markets

Abbott Laboratories, maker of the rheumatoid arthritis treatment Humira, agreed to license at least 24 generic medicines from Cadila Healthcare Ltd. and begin selling them in emerging markets.

The deal, with the Zydus Cadila unit of Ahmedabad, India- based Cadila Healthcare, includes medicines to treat pain, cancer and heart disease, Abbott said today in a statement. Abbott, based in Abbott Park, Illinois, gains rights to market the drugs in 15 countries, among them Russia, Turkey and Brazil. Financial terms weren’t disclosed.

Abbott sees a “several hundred million dollar annual sales opportunity,” Scott Stoffel, a company spokesman, said in an interview. In February, Abbott acquired the pharmaceutical business of Brussels-based Solvay SA for 4.5 billion euros ($6.2 billion), gaining momentum in emerging markets, which the company said now accounts for about 20 percent of drug sales.

The agreement “complements Abbott’s recent Solvay acquisition that already provided them with a foray into emerging markets,” said Derrick Sung, an analyst at Sanford C. Bernstein & Co. in New York, in a telephone interview. Sung has an “outperform” rating on Abbott shares.

Zydus Cadila will make the drugs for sale under the Abbott brand, Stoffel said. Zydus Cadila has operations in more than 40 emerging countries, according to its Web site.

“In this alliance we see tremendous opportunity to participate in multiple ways in a market that is growing and expanding rapidly,” Pankaj R. Patel, chairman and managing director of Cadila Healthcare, said in the statement.

Holding Options

Abbott, as part of the agreement, holds options on licenses to market more than 40 additional Zydus Cadila products, the company said in its statement.

“The Zydus agreement complements our established products strategy, augmenting this business with a broad portfolio of branded generics,” Olivier Bohuon, executive vice president of Abbott’s Pharmaceutical Products Group, said in the statement.

Abbott also said it formed an Established Products Division, encompassing products with $5 billion in annual revenue, to expand sales outside the U.S., particularly in emerging markets. The unit will be headed by Michael Warmuth, who ran the company’s diagnostics division.

Emerging markets may account for 70 percent of industry growth in drug sales “over the next several years,” Abbott said in the statement. Branded generic drugs “are expected to outpace growth of patented and generic products,” the company said.

Abbott fell 29 cents, or less than 1 percent, to $49.40 at 4 p.m. in New York Stock Exchange composite training. In Mumbai trading, Cadila Healthcare fell 1.1 rupees, or less than 1 percent, to 575 rupees.

To contact the reporter on this story: Adi Narayan in New York Anarayan8@bloomberg.net.

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