Eli Lilly is again turning to a domestic manufacturer in a challenging market. India's Strides Arcolab will serve as the manufacturing arm of a partnership to bring branded generics of Lilly ($LLY) cancer drugs to India and other emerging markets.
The deal kicks off with Strides Arcolab's injectables subsidiary Agila Specialties manufacturing 10 branded generic cancer drugs with Lilly having the option to put more in the portfolio if it likes how it works out, Reuters explains.
"Building on our recent investment in a Lilly-branded generics platform in China earlier this year, this agreement will help Lilly expand its portfolio and deliver high-quality cancer medicines to patients across emerging markets," said Jacques Tapiero, president of Lilly's emerging markets division.
Under that deal, Lilly invested $20 million in Novast Laboratories of Nantong, China, a generic and specialty drugmaker. Several years ago, Lilly made an initial investment in Novast through its venture capital unit, Lilly Asian Ventures. As part of the deal, Novast will expand its manufacturing capacity at its Nantong facility over the next several years, with Lilly providing expertise in quality standards. While the expansion will support their arrangement, it will not be used exclusively for Lilly products. The companies have "an initial list of medicines across multiple therapeutic areas that will be manufactured by Novast once the facilities are operational," Lilly says.
Strides has struck deals with other Western drugmakers, like Gilead Sciences ($GILD), that hope that large production operations will get their costs low enough to be able to make some money in emerging markets. Consultant IMS Health forecasts that annual drug spending could account for 28% of global sales by 2015, up dramatically from the 12% it encompassed in 2005. But sales in these markets are not as easy to come by as they are in Western markets where health insurance, government or private, and high standards of living make drug purchases a matter of everyday life. India and China, two of the largest emerging markets, for example, have lists of essential medicines on which they put price caps.
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