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South Africa: Glaxo Deal Opens Way for Aspen to Grow
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Business Day (Johannesburg)
24 July 2008
Posted to the web 24 July 2008
Tamar Kahn
Cape Town
Africa's biggest generic drug maker, Aspen Pharmacare, has clinched a licensing and distribution deal with pharmaceutical giant GlaxoSmithKline that will see its products enter a host of new markets.
The venture builds on Aspen's (APN's) strategy to expand its international interests.
Glaxo is the second-biggest pharmaceutical manufacturer, and appears set on entering the branded generics market to diversify and strengthen its presence in emerging markets, where demand for cheap generic medicines is growing. Emerging markets are expected to grow 13%, three times faster than western markets, and to account for 40% of growth in the worldwide pharmaceutical market by 2020, according to Glaxo.
Glaxo will license its intellectual property on a portfolio of generic drugs, which it will distribute into emerging markets Aspen does not reach, such as eastern Europe. Glaxo will sell the generics, made by Aspen and the companies it owns.
These drugs will be sold under Glaxo's brand, and the first products are expected to be launched in 2010.
Aspen will market the drugs in sub-Saharan Africa and India. Aspen CEO Stephen Saad said Aspen would get a share of profits generated by Glaxo's sales of the drugs on a sliding scale depending on the margins involved .
"We are only part of the chain," he said, noting that the benefits to Aspen from the deal would depend largely on Glaxo's success in generating sales of the medicines, which have yet to be selected.
"The deal is hugely complementary to Aspen's business," said Mark Ansley, portfolio manager at Cadiz African Harvest. "It will give Aspen reach into territories where they currently don't have a distribution footprint," he said.
Aspen already had business interests in SA, Australasia, India, East Africa, Brazil, Mexico and Venezuela, and expected at least half of future profits to be generated offshore, said Saad.
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The announcement comes hard on the hee ls of Aspen's R2,7bn acquisition of four of Glaxo's older, off-patent medicines: Eltroxin, a thyroid hormone used to treat hypothyroidism; Lanoxin, a cardiac glycoside used to treat heat failure; Imuran, an immuno-suppressant used for transplant patients; and Zyloric, an enzyme inhibitor for treating gout.
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