Evaluating the Supply Chain in Emerging Markets - Pharmaceutical Technology

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Evaluating the Supply Chain in Emerging Markets
The article examines pharmaceutical market growth, company positioning, and the innovation potential in emerging markets. Read this and other preferred organization articles in this special issue.

Pharmaceutical Technology
Volume 35, pp. s47-s51

sanofi aventis also is positioning in emerging markets. In November 2009, the company signed a memorandum of understanding with Prominvest, a fully owned subsidiary of the Russian State Corporation Rostekhnologii, confirming its intent to participate in the Pharmpolis Project. The project is part of an overall effort by the Russian government to localize innovator-drug manufacturers in Russia and foster the expansion of the country's pharmaceutical market. sanofi-aventis will use its insulin-manufacturing facility in Russia as part of a pilot initiative in the Pharmpolis Project. Other investments in 2009 include the acquisition of the Hyderabad, India-based vaccine producer Shantha Biotechnics; expansion of prefilled injection production lines for its insulin product Lantus SoloStar in China; expansion of vaccine production in Shenzen, China; and an expansion and relocation of facilities in Hangzhou, China. The company also invested EUR 100 million ($137 million) for an influenza vaccine-manufacturing facility in Mexico (1). Also, sanofi-aventis (Paris) enhanced its generic-drug portfolio and position in emerging markets during the last several years with several acquisitions of generic-drug companies: Zentiva (Czech Republic), Kendrick (Mexico), and Medley (Brazil).

In 2010, Abbott acquired the Piramal Healthcare Solutions' business (domestic formulations) for $3.72 billion. The deal consisted of an upfront payment of $2.12 billion and annual payments of $400 million during four years beginning in 2011. At the time of the announced acquisition in May 2010, emerging markets accounted for approximately 20% of Abbott's pharmaceutical sales, according to the company. Abbott estimates the combined entity of Abbott and the Piramal business has a market share in India of approximately 7%. Abbott estimates the growth of its Indian pharmaceutical business with Piramal will approach 20% annually and expects it to reach sales of more than $2.5 billion by 2020. Abbott estimates the current Indian pharmaceutical market at $8 billion and expects it to more than double by 2015.

The move followed recent deals by Abbott to increase its presence in emerging markets. In 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 has an option for an additional 40 products. Abbott anticipates that the agreement will produce the first product launches in 2012 Abbott also formed a stand-alone established products division that is focused on expanding Abbott's sales outside the United States.

In November 2010, GlaxoSmithKline (GSK) formed an alliance with the Russian vaccine maker JSC Binnopharm to enable local secondary manufacture of several GSK vaccines in Russia. Under the alliance, GSK will supply bulk vaccine and provide technology and expertise to enable Binnopharm to undertake the secondary manufacturing, including filling and packaging, under GMP standards. Binnopharm is responsible for gaining approval of their facilities to allow supply of GSK's cervical cancer, rotavirus, and pneumococcal vaccines under Binnopharm's trademark for the Russian market.

In 2009, GSK partnered with India's Dr. Reddy Laboratories under which Dr. Reddy manufactures and supplies drugs to GSK, which licenses and comarkets 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.

Pfizer also has been building its position in emerging markets, particularly in established products. In 2010, Pfizer formed a strategic global agreement for the worldwide commercialization of biosimilar insulin products with Bangalore, India-based Biocon. The agreement involves Biocon's biosimilar versions of insulin and insulin analog products: recombinant human insulin, glargine, aspart, and lispro. Pfizer has exclusive rights to commercialize these products globally, with certain exceptions, including coexclusive rights for all of the products with Biocon in Germany, India, and Malaysia. Pfizer also has co-exclusive rights with existing Biocon licensees with respect to some of the products, primarily in several developing markets. Biocon will remain responsible for the clinical development, manufacture, and supply of these biosimilar insulin products and is also responsible for regulatory activities to secure approval for these products in various geographies.

Pfizer's deal with Biocon followed other agreements with domestic India pharmaceutical companies and suppliers. In 2010, Pfizer formed a collaboration with India's Strides Arcolab under which Pfizer commercializes off-patent sterile injectable and oral products in the US. The finished dosage-form products are licensed and supplied by Strides, Onco Laboratories, and Onco Therapies, two joint ventures between Strides and Aspen PharmaCare. And in 2009, Pfizer partnered with two Indian pharmaceutical manufacturers: Aurobindo Pharma and Claris Lifesciences. Under the deal with Aurobindo, Pfizer acquired the rights to 55 solid oral-dose products and five sterile injectables in 70 emerging markets. Pfizer also acquired the rights to 15 generic injectables from Claris Lifesciences.

Pfizer also is partnering with suppliers in Latin America. In 2010, Pfizer acquired a 40% stake in Laboratorio Teuto Brasileiro, a Brazilian generic-drug company. Pfizer has an option to acquire the remaining 60% of Teuto's shares beginning in 2014, and Teuto's shareholders have an option to sell their 60% stake to Pfizer beginning in 2015. Pfizer also has the opportunity to register and commercialize Teuto products in Brazil and various markets outside of the country under its own brands, including branded and unbranded generic medicine.

Other companies also are positioning in emerging markets. In March 2010, AstraZeneca signed a license and supply agreement with the Indian drug company and manufacturer Torrent Pharmaceuticals, under which Torrent supplies to AstraZeneca a portfolio of generic medicines for emerging markets. Torrent has two large manufacturing plants. in India. At Chhatral, the company has capacity to manufacture approximately 3000 million tablets, capsules and vials, and 20,000 kilograms of API. The manufacturing plant at Baddi has a capacity to manufacture 3600 million tablets, 150 million capsules, 10 million oral liquid bottles, and 12 million sachets per annum. The capacities are as reported by AstraZeneca in a March 11, 2010, press release. Torrent's R&D Center in Gujarat has a team of over 600 scientists who provide dedicated services in the areas of discovery research, generic-drug development, and new drug delivery systems/value-added generics, according to the press release.


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