Incident 2day
Bangalore--Natco Pharma Ltd is open to selling SaveMart Pharmacy--its retail pharmacy store based in Lancaster, Pennsylvania--as the pharmacy business in the U.S. doesn't fit in with the company's current strategy for that country.
The Hyderabad, India-based generic drug maker is eyeing the opportunity from the so-called patent cliff in the U.S., wherein big pharmaceutical companies are expected to lose tens of billions of dollars in sales as top-selling drugs begin facing generic competition over the next few years. It, therefore, has altered its U.S. sales strategy and entered into agreements with several multinational drug companies--both Indian and foreign--to better tap this opportunity.
"It [the pharmacy business] doesn't have any synergy with our existing business. If a good opportunity comes along [to sell SaveMart] we'll look at it," said the company's Chief Financial Officer Bhaskara Narayana.
But Mr. Narayana said the company hasn't put the store on the block as yet as it is "not desperate" to sell.
The news sent Natco Pharma's shares 4.1% up to 265.70 rupees on the Bombay Stock Exchange at 0727 GMT. The benchmark Sensex was trading 1.1% up.
An analyst at a Mumbai-based brokerage said while the proceeds from a potential sale of the pharmacy may not be significant, it is likely to be a good strategic move as it will free up the management to focus on the generic drugs business in the U.S. He declined to be named.
Narayana said the company originally entered into the U.S. pharmacy business at it wanted to sell its generic drugs through these stores after getting U.S. regulatory clearance.
However, the company is now concentrating on getting approvals for copies of "complicated, blockbuster" drugs, and the marketing of such drugs can't be done through a handful of pharmacy stores, he added.
The supply and distribution agreements entered into with companies like Mylan Inc., Dr. Reddy's Laboratories Ltd and Lupin Ltd will help Natco tap the stronger sales network of its partners and also partly insulate the company from patent litigation, thus lowering any legal risks.
Natco has a worldwide marketing and distribution agreement with Mylan for a generic version of Teva Pharmaceutical Industries Ltd's Copaxone multiple sclerosis treatment.
Natco's agreement with Dr. Reddy's is for developing, manufacturing and supplying generic cancer drugs. With Lupin, it has agreed to jointly commercialize copies of Shire PLC's Fosrenol tablets that reduce serum phosphate levels in patients with kidney dysfunction.
The Indian company also has a deal with Watson Pharmaceuticals Inc. for a generic version of Celgene Inc.'s blockbuster blood cancer drug Revlimid.
SaveMart, which is operated by U.S. unit Natco Pharma Inc., is the only retail pharmacy that the company has in the U.S. The U.S. unit reported a net profit of 11.1 million rupees in the fiscal year ended March 31, 2010.
In January, Natco said U.S.-based K&C Pharmacy, of which it was a 75% partner, sold its retail pharmacy outlet known as Nicks' Drugs, based in Newark, New Jersey.
The sale was reported in the Business Line newspaper, citing an unnamed top company executive, who said Natco Pharma may sell SaveMart Pharmacy if it gets a good price.
The Hyderabad, India-based generic drug maker is eyeing the opportunity from the so-called patent cliff in the U.S., wherein big pharmaceutical companies are expected to lose tens of billions of dollars in sales as top-selling drugs begin facing generic competition over the next few years. It, therefore, has altered its U.S. sales strategy and entered into agreements with several multinational drug companies--both Indian and foreign--to better tap this opportunity.
"It [the pharmacy business] doesn't have any synergy with our existing business. If a good opportunity comes along [to sell SaveMart] we'll look at it," said the company's Chief Financial Officer Bhaskara Narayana.
But Mr. Narayana said the company hasn't put the store on the block as yet as it is "not desperate" to sell.
The news sent Natco Pharma's shares 4.1% up to 265.70 rupees on the Bombay Stock Exchange at 0727 GMT. The benchmark Sensex was trading 1.1% up.
An analyst at a Mumbai-based brokerage said while the proceeds from a potential sale of the pharmacy may not be significant, it is likely to be a good strategic move as it will free up the management to focus on the generic drugs business in the U.S. He declined to be named.
Narayana said the company originally entered into the U.S. pharmacy business at it wanted to sell its generic drugs through these stores after getting U.S. regulatory clearance.
However, the company is now concentrating on getting approvals for copies of "complicated, blockbuster" drugs, and the marketing of such drugs can't be done through a handful of pharmacy stores, he added.
The supply and distribution agreements entered into with companies like Mylan Inc., Dr. Reddy's Laboratories Ltd and Lupin Ltd will help Natco tap the stronger sales network of its partners and also partly insulate the company from patent litigation, thus lowering any legal risks.
Natco has a worldwide marketing and distribution agreement with Mylan for a generic version of Teva Pharmaceutical Industries Ltd's Copaxone multiple sclerosis treatment.
Natco's agreement with Dr. Reddy's is for developing, manufacturing and supplying generic cancer drugs. With Lupin, it has agreed to jointly commercialize copies of Shire PLC's Fosrenol tablets that reduce serum phosphate levels in patients with kidney dysfunction.
The Indian company also has a deal with Watson Pharmaceuticals Inc. for a generic version of Celgene Inc.'s blockbuster blood cancer drug Revlimid.
SaveMart, which is operated by U.S. unit Natco Pharma Inc., is the only retail pharmacy that the company has in the U.S. The U.S. unit reported a net profit of 11.1 million rupees in the fiscal year ended March 31, 2010.
In January, Natco said U.S.-based K&C Pharmacy, of which it was a 75% partner, sold its retail pharmacy outlet known as Nicks' Drugs, based in Newark, New Jersey.
The sale was reported in the Business Line newspaper, citing an unnamed top company executive, who said Natco Pharma may sell SaveMart Pharmacy if it gets a good price.
Posted in: India
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