Is the Pfizer-Biocon deal coming apart?

Exactly 17 months back, Pfizer Inc, one of the world’s biggest drugmakers, thought it had a swell deal when it signed up to sell insulin made by Bangalore-based Biocon Ltd, marking its push into biosimilar medicines and diabetes treatment.

The deal, sources familiar with the development said, is likely to be called off after “a couple of months of talks” over “undisclosed issues between the two companies” didn’t get sorted out.
Biocon and Pfizer could not be reached for comments.

During an earnings call for the October-December quarter results on January 25 this year, Biocon had underscored that Pfizer is increasing sales of its insulin brand in India and that Biocon has been supplying the drug.

A cancellation of the deal would land a bodyblow to the long-term strategy of Pfizer in India, which is to have a large presence in diabetes treatment.

India has one of the largest numbers of diabetes patients in the world. Pfizer was aiming to garner a large chunk of the more than Rs1,000 crore annual insulin sales in India, which is currently dominated by Danish giant Novo Nordisk AS.

From the local generics makers, Lupin and Wockhardt have been trying to gnaw away some spoils too.

Pfizer, the maker of Lipitor, the blockbuster cholesterol fighting drug, paid Biocon $200 million (about Rs900 crore then) upfront under the agreement struck between the two companies.
Biocon was also to be eligible to receive additional development and regulatory milestone payments of up to $150 million plus payments related to sales of these medicines.

Pfizer stood to gain from greater access to the $14 billion market for insulins used to control diabetes ahead of 2015, when a number of products are expected to lose patent protection.

Pfizer will have exclusive rights to commercialise Biocon’s drugs globally with certain exceptions, such as Germany, India and Malaysia, where Biocon will have co-exclusive rights.

The products were to be versions of recombinant insulins sold under brand names Novolin by Novo Nordisk and Humulin by Eli Lilly; as well as glargine, which is sold now as Lantus by Sanofi-Aventis; aspart, sold by Novo as Novolog; and lispro, sold by Lilly as Humulog.

Biocon’s recombinant, or genetically engineered, insulin products are already approved in 27 countries in developing markets.
Pfizer was expecting to gain approval for the recombinant insulins in Europe this year and in the United States as soon as 2015,

David Simmons, president of Pfizer’s established products business unit, had told at the time of announcement of the deal. Approvals for the other products will come later in most markets.
“We believe we will be first to market in most if not all the countries worldwide for each of the products in the portfolio,” Simmons had said.

Late-stage clinical trials are ongoing for the products. Simmons said Pfizer would offer the insulins at a lower price than the brands, but declined to specify the discount.

Emerging markets are a priority for western drug companies such as Pfizer, as they face slowing sales in their home markets.
    (With agency inputs)