GlaxoSmithKline is betting that Amgen gets the A-OK for denosumab in Europe and beyond. The U.K. drugmaker is paying Amgen $120 million plus royalties for the right to market the osteoporosis med in Europe. Given that the experimental drug is Amgen's next great hope and a potential $2 billion-plus blockbuster, it's a coup for Glaxo. In fact, the company beat out 10 others for the privilege.
But the most interesting piece of the puzzle could be the two companies' deal on emerging market sales of the drug. While Amgen retains the right to sell denosumab for cancer in Europe, those rights go to Glaxo in emerging markets, where Amgen doesn't have a commercial presence. As you know, Glaxo has been beefing up its operations in the developing world, snapping up smaller drugmakers and cutting prices to make inroads.
Those efforts can help Glaxo commercialize denosumab in markets such as China, Brazil, India and South Korea, where pharma sales growth is far outpacing increases in mature markets like the U.S. and Europe. As the middle class grows in these countries, demand for high-tech healthcare is growing, too.
Though pricing is an issue--which is why Glaxo is modifying its price tags for those markets--Glaxo must believe it can find the right numbers. And in those markets, there's no revenue-sharing with Amgen. Glaxo will buy its denosumab supplies from Amgen for resale. Of course it's a long road to commercialize a new drug in a new country. We'll have to wait and see how it pays off.