Novartis’ Sandoz is doubling down on antibiotics with a hefty deal for GlaxoSmithKline’s cephalosporin business.
Generics-focused Sandoz will pay $350 million up front and up to $150 million in milestone payments for Zinnat, Zinacef and Fortum, established antibiotic brands sold in more than 100 countries.
Expected to close later his year, the deal excludes rights GSK previously sold—in the U.S., Australia and Germany—and India, Pakistan, Egypt, Japan and China, where GSK will keep the rights. Combined sales of the GSK drugs reached $140 million in 2020.
The acquisition comes after Sandoz committed €150 million, alongside the Austrian government, this summer to expanding its leading antibiotics production site in Kundl.
The buyout and production expansion highlights Sandoz’s renewed interest in antibiotics at a time when the broader industry is also turning its attention to the long-overlooked category, thanks to the COVID-19 pandemic.
And for GSK, the deal culminates a review of its antibiotics business that began in 2017 after Emma Walmsley became CEO, and renewed last March. While GSK refocuses on innovative medicines and vaccines, it has maintained some antibiotic assets, including the popular brand Augmentin as well as gepotidacin, an experimental drug in phase 3 testing for urinary tract infections and gonorrhea.
The pandemic not only reignited interest in infectious diseases but also reminded the world of long-standing antibiotic supply chain issues and lack of development in the field.
The Biotechnology Innovation Organization (BIO) trade group, which has highlighted the industry's R&D in the fight against superbugs, pointed up that problem last April in a marketing campaign.
“We're all focused on the coronavirus, but there’s another major threat still lurking: superbugs," BIO said at the time. "The pandemic is a stark reminder of the need to be prepared for public health crises, particularly the growing danger of antibiotic-resistant bacteria.”
Indeed, global lockdowns triggered cross-border trade shutdowns and created a halt in drug supplies from China, which happens to be the world’s leading supplier of antibiotics. It was another reminder of how unprepared the Western world has been for a blackout of those important medicines.
The renewed attention to antibiotics did spur some pharma company action. A well-heeled consortium of Big Pharmas—including Novartis, as well as Pfizer, Johnson & Johnson and Merck—launched the $1 billion AMR Action Fund with the goal of getting two to four new antibiotics approved by 2030.
Pharma companies plan to work through the fund, named for antimicrobial resistance, to offer funding and technical expertise to help young biotechs advance new antibiotics.
The intent of the fund is “to sustain an antibiotic pipeline that is on the verge of collapse, a potentially devastating situation that could affect millions of people around the world,” Eli Lilly CEO David Ricks said at the time. Ricks is also president of the International Federation of Pharmaceutical Manufacturers & Associations, which helped organize the fund.