Pfizer (PFE) recently entered into a global agreement with Indian biotech company Biocon, for certain diabetes biosimilars. The deal relates to the global commercialization of biosimilar versions of insulin and insulin analog products like recombinant human insulin, glargine, aspart and lispro.
Terms of the Deal
Per the terms of the deal, Pfizer will commercialize these products across the world excluding certain territories. The company will share commercialization rights with Biocon for all these products in Germany, India and Malaysia. In case of several developing markets, Pfizer will share commercialization rights with existing licensees.
Biocon will be responsible for developing, manufacturing, supplying and gaining regulatory approval for these products. We note that Biocon’s version of recombinant human insulin is already approved in 27 developing markets. Meanwhile, the biosimilar version of Sanofi-Aventis’ (SNY) Lantus (insulin glargine) is available in India.
In addition to receiving upfront payments of $200 million, Biocon is also entitled to receive up to $150 million on the achievement of development and regulatory milestones. Besides this, Biocon could receive payments related to product sales.
Access to Diabetes Biosimilars Market
We view this deal as a smart strategic move by Pfizer. This deal should allow Pfizer to gain a strong foothold in the biosimilars and diabetes market. The diabetes biosimilars market represents huge commercial potential with several insulin analogs slated to lose patent protection by 2015.
The Pfizer-Biocon deal is another example of global pharma companies looking towards Indian companies to help strengthen their presence in emerging markets. While Pfizer itself has agreements with other Indian companies like Strides Arcolab and Aurobindo Pharma, GlaxoSmithKline (GSK) has an agreement with Dr. Reddy’s Laboratories (RDY) for the development and marketing of select products in various emerging markets.
We currently have a Neutral recommendation on Pfizer. The Biocon deal comes on the heels of Pfizer’s announcement regarding its intention to acquire King Pharmaceuticals (KG).
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