India's Sun Pharma Partners With Merck, Country Passes China in Pharma Generic Deals

Includes: GSK, MRK, PFE, RBXZF
by: ChinaBio Today

Merck (NYSE:MRK), known as Merck, Sharp and Dohme in most of the ex-U.S. world, will partner with Sun Pharma (BY-524715) of India in a venture aimed at "innovative branded generics." Sun will both develop and manufacture the drugs. Merck will help Sun with clinical development, registration and marketing. Financial details of the agreement were not disclosed, though the partnership was described as a 50-50 joint venture.

Companies like Pfizer Inc. (NYSE:PFE) and GlaxoSmithKline PLC (NYSE:GSK) have already entered into drug supply deals with the major Indian generic drug companies. These acquisitions are a quick way to build their generic drug sales, a necessary step for big pharmas to increase their presence in the now-necessary markets of developing countries.

Merck, Pfizer and GlaxoSmithKline are very active in China, though they have tended to strike research partnerships in the PRC, not deals with companies to provide generic drugs. They also have research, manufacturing and distribution activities in the PRC.

In January 2010, Pfizer stuck a deal with India's Strides Arcolab. Pfizer expects Strides Arcolab to deliver 40 sterile injectable and oral products. GlaxoSmithKline reached an agreement with Dr. Reddy’s Laboratories in June 2009 to develop and market selected products across a number of emerging markets, excluding India.

These arrangements do not always work out. In January, Merck ended a partnership with Ranbaxy Laboratories (OTC:RBXZF). The two-year old relationship was supposed to develop antibacterial and anti-fungal drugs. Ranbaxy stood to gain up to $100 million in upfront and milestone payments through the agreement. The cause of the breakup was not disclosed.

Sun is the largest pharma manufacturer in India by market capitalization. It exports its drugs internationally, including to the U.S. Besides APIs, its products include drugs for the fields of psychiatry, neurology and cardiology. In 2008, Sun made two U.S. acquisitions, Caraco and Chattem Chemicals. According to Bloomberg, Sun is currently seeking a major M&A deal in the U.S. to increase its presence there.

Disclosure: None.