Under the agreement AstraZeneca will initially purchase from Torrent the licenses 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 rigorous quality and process standards. Based in India, Torrent has been manufacturing medicines for over thirty years and has a strong track record in registering and manufacturing a wide range of products.

In 2009, Pfizer entered into a similar arrangement with Aurobindo Pharma and Claris Lifesciences, while GlaxoSmithKline signed a tie-up with Dr Reddy's Laboratories, among others. The emerging markets are forecast to contribute around 70% of pharmaceutical industry growth in the next five years, and branded generics represent approximately 50% by value in these emerging markets. Off-patent drugs tend to sell better in emerging markets if they are attached to a recognisable pharmaceutical brand; consumers consider a Big Pharma name to be a quality guarantee. AstraZeneca believes it can capitalise on this opportunity and over time plans to broaden its portfolio beyond these initial 18 products.

In recent years, AstraZeneca has invested significantly in key emerging markets, and has built a strong presence in many of them. Expanding the company’s branded generics portfolio will help to leverage its established sales and marketing presence in these countries.

Mr.Tony Zook, Head of AstraZeneca’s global commercial organisation, said: “In markets where consumers and physicians have a strong preference for trusted brands, we believe AstraZeneca’s long-standing reputation for quality is a sustainable competitive advantage. Working in partnership with Torrent will extend the range of branded medicines we can offer to patients in emerging markets, where we see continuing opportunities for our business to grow. We have chosen Torrent because of their complementary product portfolio and proven ability to manufacture to AstraZeneca’s high quality standards.”

As reported by Scrip, AstraZeneca's push into emerging markets is –like Pfizer’s– also seen as part of an attempt to cushion the impact of the potential sales gap that it faces when some of its key products –including Seroquel (quetiapine) and Nexium (esomeprazole)– go off-patent in various markets over the next few years.

According to Citigroup analysts, AstraZeneca generated 13%, or about US$4.4 billion, of its revenue in 2009 from emerging markets, and it is reportedly aiming to increase the figure to 25% by 2014 as the patents for some of its top drugs are scheduled to expire in the coming years.

References:

AstraZeneca Extends Branded Generics Capability With Torrent Agreement. AstraZenenca Press Release 11 March 2010.

Lianne Dane. AstraZeneca to boost presence in emerging markets with Torrent deal. FirstWord. 2010 March 11.

Anju Ghangurde. AstraZeneca signs deal with Torrent to tap into emerging markets. Scrip News. 2010 March 11.

Tracy Staton. AZ pumps up branded generics with Torrent deal. FiercePharma. 2010 March 11.