GSK exits U.S. penicillin market with Dr. Reddy's ($RDY) deal

GlaxoSmithKline ($GSK) says so long to penicillin in the U.S. The drugmaker is selling off its penicillin-manufacturing facility in Bristol, TN, along with the U.S. rights to branded penicillin meds Augmentin and Amoxil, to the Indian generics maker Dr. Reddy's Laboratories ($RDY). The terms of the deal weren't disclosed.

Both Augmentin and Amoxil have generic rivals in the U.S., so they're not big sellers for GSK. The would prefer to spend its time and money on other projects, SVP Jean-Paul Reynaud said in a statement. "This sale will enable the facility to provide oral penicillin-containing antibacterial products...and will allow GSK to focus resources on our newer portfolio of differentiated products," Reynaud said. GSK will keep the rights to sell Augmentin and Amoxil outside the U.S.--for instance, in emerging markets where GSK could market them as branded generics.

For Dr. Reddy's, the purchase is a chance to get into penicillin meds in the U.S. Plus, the purchase will give the Indian company "manufacturing capabilities that did not previously exist within Dr. Reddy's," global generics chief Abhijit Mukherjee said in a statement. "This acquisition is in line with our strategy to significantly scale up our generics business in North America."

- check out the release from GSK
- see the WSJ piece
- get more from Reuters