At Pfizer, signs of priority change

Does Pfizer’s decision to call off its deal with Bangalore-based Biocon indicate a change in the US firm’s game plan for India?
Some feel it does.

“Many MNCs are redrawing their strategies to suit the off-patent regime and also the healthcare reforms post the US presidential elections. Pfizer cannot be an exception,” said an industry source, adding that issues related to the US Food and Drug Administration (USFDA) are forcing a change in strategy.

“There has also been a restructuring within Pfizer with an intention of focusing on core pharma,” the source pointed out, requesting anonymity.

“This is the time when most global pharma companies are keen on alliances to neutralise the patent cliff. The sector has not seen a blockbuster after Lipitor. So, definitely there is a change of strategy — to align with more stringent FDA rules. In fact, the situation in Europe and the US is going to be much more difficult in the days to come since the regulators would press for greater compliance. Several companies are keen on watching the regulatory issues to pan out before taking a plunge,” said a senior official at a pharma company, also refusing to be named.

Pfizer, which also has sourcing deals with Hyderabad-based Aurobindo Pharma, Ahmedabad-based Claris Lifesciences and Bangalore-based Strides Arcolabs for generic pills and injectibles, has had problems with the first two. Last year, the FDA issued an import alert for Aurobindo’s Hyderabad facility. Claris, on the other hand, had recalled some of its antibiotics and other products from the US in 2010, as a precautionary measure against possible contamination.

“Pfizer’s image did get tarnished in the process. Its association so far with Indian partners has not been clean,” said an industry veteran who has worked with US drugmakers.
But the split with Biocon could be due to some other reason, said the veteran. Maybe the firms are no longer finding synergies, or it could be that Pfizer is finding it tough to get by in the global insulin market.

Globally, the market for insulin is dominated by Novo Nordisk, Eli Lilly and Snaofi Aventis, and said to be growing at a compounded annual rate of 20%, as per market research firm RNCOS.
“It would be premature to say whether Pfizer will re-look at India, a market hard to ignore. Though it has had a strong presence here, getting a stranglehold would mean partnering with local players,” said the veteran.

For instance, in the case of Aurobindo, Pfizer had decided to cut down the number of emerging markets it planned to tap through the alliance from the initial 60-70 to around 25 and the number of products to be launched from 800 to around 180.

“Pfizer had decided to keep off certain smaller markets for a variety of reasons including the viability,” said the industry source.
But India’s no small market. Abbott’s acquisition of Piramal Healthcare’s domestic formulations business in 2010 and earlier deals involving Sanofi Aventis and Daichii Sankyo, which acquired Shantha Biotech and Ranbaxy Laboratories, suggest its growing importance.

“MNCs could look at other partners but a de-focus on India is out of question,” said the industry veteran.

Ranjit Kapadia, senior vice-president, Centrum Broking, concurred. “Alliances help in penetrating India faster.”

In fact, alliances, deals and acquisitions of local companies may be the only way for multinationals to capture a substantial presence in the Indian market, said Adithya Bhat, MD, Protiviti Consulting.

Biocon keeps the cash, & then some
As reported by DNA, Pfizer and Biocon on Tuesday called off their deal, struck in October 2010, citing “individual priorities”.

The split ends a revenue stream for Biocon with immediate effect, though chairman Kiran Mazumdar Shaw said it will retain payments already made and “receive additional amounts as settlement from escrow.”

Pfizer remains committed to developing a broad product portfolio, both internally and through collaborations, Diem Nguyen, its general manager for biosimilars, said in a separate statement.