News January 2007

Ranbaxy CEO Open To 'Authorized Generic' Pacts

Branded pharmaceutical companies generally perceive generic-drug makers as thorns in their side, and Ranbaxy Laboratories Ltd. (500359.BY) has been as sharp as any of the generics.

But the Indian generic drug company's leader thinks there's an opportunity for more cooperation between generics and Big Pharma companies.

For one thing, Ranbaxy is open to striking so-called "authorized generics" deals in the branded drug makers, Chief Executive Malvinder Singh told Dow Jones Newswires Wednesday on the sidelines of the annual meeting of the World Economic Forum here.

In an authorized generic deal, a branded drug maker either sells its own generic version of a branded drug upon patent protection, or it allows a generic company to do so. The deals with generic companies typically run for six months after a patent's expiration, timed to compete with yet another generic company's version that has been granted 180 days of market exclusivity under complex regulations.

For example, Merck & Co. (MRK), Whitehouse Station, N.J., had a deal to allow Ranbaxy rival Dr. Reddy's Laboratories (RDY) of India to sell a generic version of Merck's Zocor cholesterol drug last year. This competed with the generic versions sold by Ranbaxy and Teva Pharmaceutical Industries Ltd. (TEVA) of Israel, which were the only other companies allowed to sell them for the first six months after patent expiration because they were the first to file for regulatory approval.

Ranbaxy hasn't previously engaged in authorized-generics deals, but it would consider it. "We are certainly open to the opportunity," Singh said. For a generic company, such deals represent incremental revenue they wouldn't have gotten otherwise, he said.

Another area of potential cooperation is research, Singh said. Ranbaxy has an agreement with GlaxoSmithKline PLC (GSK), the U.K. drug giant, to jointly discover and develop potential drugs. Singh said Indian drug makers have solid scientific talent and could help lower costs for Big Pharma companies.

Separately, Singh said Ranbaxy continues to evaluate a potential bid to acquire the generics unit of Merck KGaA (MRK.XE) of Germany. Analysts have estimated the unit to be worth more than $5 billion. Ranbaxy has made acquisitions, but such a bid would be its biggest by far and would vault it into the top five generic-drug companies in the world by sales.

"We would hope to put in a good proposal that enables us to get it, but I think it's too premature to say what will happen," Singh said. Ranbaxy expects to begin performing due diligence on the Merck KGaA unit in early February.

Source http://www.marketwatch.com/news/