Pfizer Acquires Rights to Biocon Insulin Products for $200 Million Upfront

Pfizer Inc., the world’s biggest drugmaker, agreed to pay $200 million in upfront payments for rights to four insulin products to expand its diabetes offerings in emerging markets.

Biocon can get additional milestone payments of as much as $150 million and will receive payments linked to product sales by New York-based Pfizer, the companies said in a statement today. Biocon, based in Bangalore, India, will be responsible for developing and manufacturing the diabetes treatments and for securing new regulatory approvals.

About 80 percent of people with diabetes live in low and middle-income countries, according to the World Health Organization in Geneva. Pfizer has been expanding its business in emerging markets such as India and focusing on the therapeutic areas of diabetes, vaccines, cancer, pain, inflammation and Alzheimer’s disease.

“It’s a big surprise that Pfizer is paying so much up front,” said Bino Pathiparampil, an analyst at India Infoline Ltd. in Mumbai, in a telephone interview. Insulin revenue from emerging markets will begin immediately, while new approvals and sales from the deal will take at least 3 to 4 years to accumulate, he said.

Pfizer rose 5 cents to $17.80 at 4 p.m. in New York Stock Exchange composite trading. The stock has declined 2.1 percent this year. Biocon rose 3.1 rupees, or 0.8 percent, to 403.1 rupees in Mumbai trading before the announcement.

Biocon Products

The Biocon products include recombinant human insulin and generic versions of Sanofi-Aventis SA’s insulin Lantus, Novo Nordisk AS’s NovoLog and Eli Lilly & Co.’s HumaLog. Biocon’s recombinant human insulin formulations are approved in 27 countries in developing markets and is being sold in 23. Glargine, the competitor to Lantus, has been introduced in its first market, India, the companies said.

Biocon plans to spend $300 million in the next three years to expand capacity, Chief Financial Officer Murali Krishnan said in Bangalore today.

About 171 million people were living with diabetes worldwide in 2000, according to the World Health Organization. That figure will more than double by 2030, the agency estimates on its website.

To contact the reporters on this story: Tom Randall in New York at trandall6@bloomberg.net; Adi Narayan in Mumbai at anarayan8@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net.

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