Pfizer tilts to copycats with Aurobindo deal

PfizerAfter trying it out for almost a year, the world's biggest drug-maker Pfizer Inc, has decided to turn copycat in right earnest. And the $50 billion giant will take the help of Hyderabad-based Aurobindo Pharma, an established copycat drug-maker, to make this happen. The multinational will license 70 generic drugs and 12 sterile injectibles, including penicillins and cephalosporins, which according to industry watchers are valued at over $200 million in sales, from Aurobindo for marketing in the US, and Europe. That is good news for Aurobindo but may not leave much for Pfizer to smile about, say analysts.

Aurobindo's capacities, which have been lying idle for some time will be utilized, while it will also make some good money from upfront payments and royalties. But Pfizer will not make much money as the margins are extremely low in this business while its costs will go up manifold, said First Global analyst Kavita Thoma. Pfizer and Aurobindo entered into a similar agreement for five products in 2008. Now the same has been extended to 71 other drugs, 40 for the US and 20 for Europe in addition to 11 others for France apart from 12 sterile injectibles for these markets.

Aurobindo will manufacture these loss of exclusivity (LOE), products which will be marketed by Pfizer's newly formed established product business unit. According to Pfizer, the global non-exclusive, or off-patent, drugs market represents a $270 billion market current and has the potential of growing to $500 billion over the next five years.

Solid oral dose products represent the largest category within this. According to an Aurobindo spokesperson, these drugs targeted at the cardiovascular and central nervous system disease will keep the company's production lines busy adding to considerable upsides this year.

However, he refused to divulge further financial details. However, given that the pipelines of potential blockbuster drugs of most pharma majors are diminishing at a time when copycat drug-makers are eating away into their markets shares through patent challenges, Pfizer's logic in entering the highly competitive and uncertain generics market is quite understandable.

C Chitti Pantulu DNA