While growth in emerging markets is enticing to Big Pharma, patients and governments often lack the wherewithal to pay for expensive drugs, making price point particularly important. Eli Lilly ($LLY) is joining the trend of picking a low-cost partner with the expectation that it can more easily reach that sweet spot.
Lilly and Indian generics maker Strides Arcolab have struck a deal for Strides' injectable drugs subsidiary Agila Specialties to manufacture 10 Lilly branded generic cancer drugs for India and other emerging markets. If Lilly likes how that works, it has an option to pile some more into the portfolio, Reuters explains.
"Cancer medicines of the highest quality continue to be an unmet need in many markets around the world," Jacques Tapiero, senior vice president and president, emerging markets at Eli Lilly, said in a statement.
Consultant IMS Health forecasts that annual drug spending could account for 28% of global sales by 2015, up dramatically from 12% in 2005. But sales in these markets are not as easy to come by as they are in Western markets where health programs and high standards of living make drug purchases a matter of everyday life. India and China, two of the largest emerging markets, have lists of essential medicines on which they put price caps. China recently slashed prices on 95 drugs--including cancer and immune-system treatments--by an average of 17%. And India is looking at placing 348 generic drugs under new price caps, up from just 74 today.
Some Big Pharma companies are attacking the challenge by forming partnerships with local producers with lower production costs as well as ties to local markets. Gilead Sciences ($GILD), which produces some of the most effective but priciest HIV-fighting treatments, recently struck just such a deal with three companies, including Strides Arcolab. The agreements include Gilead's Emtriva (emtricitabine) and the combo drug Truvada, which recently won FDA approval for preventing HIV infection. Indian generics giant Ranbaxy Laboratories as well as U.S. generics maker Mylan ($MYL), round out that manufacturing pact. The companies are aiming for high-volume production at reduced cost so that prices can be lowered.
- read the Reuters story
- here's more from The Economic Times