India - As Hospira finalises Orchid acquisition, AstraZeneca collaborates with Torrent

Hospira completes Orchid acquisition; AstraZeneca signs a deal with Torrent

On 30th March, Orchid and Hospira announced the completion of the transfer of Orchid’s generic injectable pharmaceuticals business to Hospira for approximately US$400 million.

The transfer includes Orchid’s beta-lactam antibiotic formulations manufacturing complex (comprising cephalosporin, penicillin and carbapenem facilities), and pharmaceutical research and development facility at Irungattukottai, Chennai, India, as well as its generic injectable dosage-form product portfolio and pipeline. Orchid is one of the top five generic beta-lactam antibiotics manufacturers globally.

In addition, the companies signed a long-term agreement for Orchid to supply APIs for the acquired business. To help facilitate the transition process, the companies entered into transitional services agreements for approximately 15 months.

Also in March, it was announced that a licence and supply agreement had been signed, pursuant to which Torrent will supply to AstraZeneca a portfolio of generic medicines for which Torrent already has licences in a range of countries. Working in partnership with Torrent, AstraZeneca intends to brand and market these products in many of its emerging markets, where it already has a strong commercial footprint.

Under the agreement, AstraZeneca will initially purchase from Torrent the licences and market authorisations for 18 products in nine countries. The agreement allows the flexibility to add further products and new countries where AstraZeneca sees opportunities for growth. Financial terms were not disclosed. Torrent will manufacture the medicines working to AstraZeneca's quality and process standards.

In making this agreement with Torrent, AstraZeneca is following in the footsteps of other large multinational innovator companies. Most notable in recent months has been Pfizer, which has entered into a series of agreements with Indian generic firms, notably Aurobindo, Claris Lifesciences and Strides Arcolab.

Further reading - A detailed review of the Indian pharmaceutical market is available from Espicom: The Pharmaceutical Market: India (published May 2010)

UK - How will the aftermath of the economic recession affect the UK pharmaceutical market?

Reductions in health spending and industry job cuts could have an impact on the market, but an ageing population and a health service under pressure will guarantee an increasing demand for pharmaceuticals.

The UK pharmaceutical market is set to experience moderate growth over the coming years, tempered slightly by the effects of the economic recession. Public spending cuts are inevitable, as public debt continues to increase, and health expenditure is set to suffer as a result. In 2010 the NHS budget is £102.3 billion, but this could fall by 2.5 to 3.0 per cent per annum from 2011/12. According to the Budget 2010, the NHS and the Department of Health will be required to make savings of £4.35 billion (US$6.81 billion) by 2012/13. This follows a period of huge growth in health spending under the Labour government, which has seen the NHS budget almost triple. Despite budget constraints, increased pressure on the NHS to cope with the health needs of an ageing population will lead to a rise in demand for pharmaceuticals, and a willingness to invest in new therapies to ensure effective treatments.

Many pharmaceutical companies based in the UK have announced job cuts and site closures in recent months, in an effort to reduce costs. AstraZeneca announced the closure of a number of its R&D sites in March 2010 leading to 3,500 job cuts worldwide, including a site in Charnwood and another in Cambridge. This follows a further 8,000 job cuts within the company worldwide, which were reported in January 2010. In February 2010, GlaxoSmithKline announced in 380 jobs cuts at its R&D site in Essex, following a shift in the company’s research focus. Furthermore, Eli Lilly, Pfizer, GlaxoSmithKline and AstraZeneca all announced job losses worldwide during 2009, affecting positions in the UK. These cuts are to be expected considering the economic climate, as well as upcoming challenges for these companies, including patent expiries, increased generic competition and slowing innovation.

Further reading - An in-depth review of the UK pharmaceutical market is available from Espicom: The Pharmaceutical Market: United Kingdom (published May 2010)

UK - How will the economic recession affect the UK pharmaceutical market?

Reductions in health spending and industry job cuts could have an impact on the market, but an ageing population and a health service under pressure will guarantee an increasing demand for pharmaceuticals.

The UK pharmaceutical market is set to experience moderate growth over the coming years, tempered slightly by the effects of the economic recession. Public spending cuts are likely, as public debt continues to increase, and health expenditure is set to suffer as a result. In 2010 the NHS budget is £102.3 billion, but this could fall by 2.5 to 3.0 per cent per annum from 2011/12. This follows a period of huge growth in health spending under the Labour government, which has seen the NHS budget almost triple. However, the NHS is well equipped to deal with the financial shortage, as it has seen marked improvements in recent years.

Many pharmaceutical companies have announced job cuts worldwide in recent months, in an effort to reduce costs, and many staff based in the UK are likely to be affected. These companies include Eli Lilly, GlaxoSmithKline, AstraZeneca and Pfizer. Job cuts are to be expected considering the economic climate, as well as upcoming challenges for these companies, including patent expiries, increased generic competition and slowing innovation.

A number of key pharmaceutical and biologic products are going off patent in the coming years, which will strengthen the generics market. Despite budget constraints, increased pressure on the NHS to cope with the health needs of an ageing population will lead to a rise in demand for pharmaceuticals, and a willingness to invest in new therapies to ensure effective treatments.

Further reading - An in-depth analysis of the UK pharmaceutical market is available from Espicom: The Pharmaceutical Market: United Kingdom (published January 2010)

EU - EU Commission Raids Pharmaceutical Companies Suspected of Anti-Competitive Behaviour

The EU Commission carried out raids at several pharmaceutical companies on 6th October 2009, as part of its investigation into anti-competitive behaviour within the industry.

Surprise inspections were confirmed at sanofi-aventis, Teva, Novartis and Ranbaxy Laboratories.

This is the third time that the EU Commission has carried out raids. In January 2008, the EU Commission raided the offices of GlaxoSmithKline, AstraZeneca, sanofi-aventis and several generic competitors, and in November 2008, Teva, Servier and Krka Group were all raided.

In a statement the EU Commission said, “The Commission has reason to believe that the provisions of the EC Treaty prohibiting restrictive business practices and/or the abuse of a dominant market position... may have been infringed.”

However the regulators stressed, “The fact that the European Commission carries out such inspections does not mean that the companies are guilty of anti-competitive behaviour nor does it prejudge the outcome of the investigation itself.”

The raids follow an 18-month inquiry into anti-competitive practices within the pharmaceutical industry, the findings of which were released in July 2009 (see EU - Competition Inquiry Findings Released). The inquiry found that at least 200 settlement agreements between generic and originator companies were known, and that many of these were formed to restrict generic entry onto the market.

The European Commission is already investigating Servier and some generic firms on suspicion of blocking a generic copy of the cardiovascular drug perindopril from entering the market.

Further reading - Pharmaceutical market profiles for all European countries are available from Espicom: Pharmaceutical Market Reports; Europe