Contract R&D and Clinical Materials Outsourcing in Emerging Markets - Pharmaceutical Technology

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Contract R&D and Clinical Materials Outsourcing in Emerging Markets
As emerging markets become increasingly important for the pharmaceutical majors, companies are re-evaluating their outsourcing strategies. This article is part of the 2010 Outsourcing Resources special issue.

Pharmaceutical Technology
Volume 34, pp. s30-s36

Company activity

Several large pharmaceutical companies' recent activities in emerging markets reflect this strategic focus on established and generic products. For example, in May 2010, Abbott (Abbott Park, IL) agreed to acquire Piramal Healthcare's (Mumbai) Piramal Healthcare Solutions business (domestic formulations) for $3.72 billion. Abbott sees the acquisition as a way to bolster its revenues in emerging markets, which currently account for approximately 20% of Abbott's pharmaceutical sales, according to a May 2010 Abbott press release. Upon completion of the deal, which is expected in the second half of 2010, Abbott estimates it will have a pharmaceutical market share in India of approximately 7%. Abbott estimates the growth of its Indian pharmaceutical business with Piramal will approach 20% annually and expects its sales in India to reach $2.5 billion by 2020. Piramal's Healthcare Solutions business is becoming part of Abbott's stand-alone Established Products Division, which Abbott formed earlier this year.

The move follows recent deals by Abbott to increase its presence in emerging markets. In May 2010, the company signed a licensing and supply agreement with the pharmaceutical company Zydus Cadila (Ahmedabad, Gujarat, India) for a portfolio of pharmaceutical products that Abbott will commercialize in 15 emerging markets. Under the agreement, Abbott gained the rights to at least 24 Zydus products and will have an option for an additional 40 products.

Other companies have made similar deals. In March 2010, AstraZeneca (London) signed a license and supply agreement with the Indian drug company and manufacturer Torrent Pharmaceuticals, under which Torrent will supply to AstraZeneca a portfolio of generic medicines for emerging markets. In 2009, GlaxoSmithline (GSK, London) partnered with India's Dr. Reddy Laboratories (Hyderabad, Andhra Pradesh, India). Dr. Reddy will manufacture and supply drugs to GSK, which will license and comarket the drugs in various countries in Africa, the Middle East, Asia-Pacific, and Latin America. In December 2009, GSK extended its strategic relationship and acquired a 19% stake in the South African pharmaceutical company Aspen PharmaCare to serve emerging markets.

Earlier this year, Pfizer (New York) formed a collaboration with India's Strides Arcolab (Bangalore, India) under which Pfizer will commercialize off-patent sterile injectable and oral products in the US. The finished dosage-form products will be licensed and supplied by Strides, Onco Laboratories, and Onco Therapies, two joint ventures between Strides and Aspen PharmaCare (Durban, South Africa), according to a January 2010 Pfizer press release. And in 2009, Pfizer partnered with two Indian pharmaceutical manufacturers: Aurobindo Pharma (Hyderabad, India) and Claris Lifesciences (Ahmedabad, India). Under the deal with Aurobindo, Pfizer acquired the rights to 55 solid oral-dose products and five sterile injectables in 70 emerging markets and will commercialize those products, according to a May 2009 Pfizer press release. Pfizer also acquired the rights to 15 generic injectables from Claris Lifesciences.

Also, sanofi-aventis (Paris) enhanced its generic-drug portfolio and position in emerging markets during the last two years with several acquisitions of generic-drug companies: Zentiva (Prague), Kendrick (Mexico City), and Medley (Campinas, Brazil). And the Japanese pharmaceutical company Daiichi Sanyko (Tokyo) acquired a majority stake in the Indian pharmaceutical company Ranbaxy Laboratories (Gurgaon, Haryana, India) in 2008.

An evolving pharmaceutical value chain

As the strategic importance of emerging markets increases, pharmaceutical companies are evaluating the full spectrum of activities in the pharmaceutical value chain in these markets, including the role of outsourcing. Historically, pharmaceutical outsourcing to emerging markets involved the commercial supply chain. Outsourcing activities involved the sourcing of raw materials and non-GMP intermediates and later progressed to include advanced intermediates and finished APIs. The type of activity that is outsourced depends on the company, the product, the stage of the product in its life cycle (i.e., generic drug or a product late in its product life cycle), and other factors. However, pharmaceutical outsourcing in emerging markets is evolving to research and development (R&D) activities.


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