Novartis expands generics portfolio with Oriel buy

Novartis (NYSE: ADR) is beefing up its generic division Sandoz with the purchase of U.S.-based Oriel Therapeutics. The deal brings a pipeline of copycat respiratory meds, a welcome addition after the high-profile failure of one asthma-and-COPD project it had going under a partnership with Vectura Group. And it includes an electronic inhaler that may win FDA clearance more easily than the Vectura device could, Reuters says.

Although Novartis wouldn't put a dollar figure on the deal, it says Oriel investors would get milestone payments as new products get regulatory approvals. Analysts say Novartis, wary after the Vectura trouble, probably structured this deal differently. "[W]e reckon that the deal is going to be strongly back end loaded, hence a low upfront payment, some milestone upon filing and approval and then royalties," Bank Vontobel analyst Andrew Weiss tells the Wall Street Journal.

Sandoz is putting lots of emphasis on respiratory drugs these days. "One of our strategic objectives is to offer fully substitutable generic versions of key branded medicines, including respiratory medicines," Sandoz division chief Jeff George says in a statement. And there are plenty of respiratory drugs to be knocked off over the next few years; half of the $32 billion market is going off patent by 2016, the company says.

But inhaled drugs can be a minefield, because it's not just the drug itself that needs an FDA approval, but the drug-delivery device as well. That's the reason that GlaxoSmithKline CEO Andrew Witty says he's not too worried about generic competition for Advair, the company's leading asthma and COPD medication. As if to prove Witty right, the drug candidate Sandoz handed back to Vectura was widely believed to be an Advair copycat, Reuters reports. 

- get the Novartis release
- see the WSJ story 
- read the article from Reuters

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