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Sun Pharma In The News

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Sun Pharma, Merck form JV to sell generic drugs in emerging markets


Venture to leverage Sun's drug development, marketing traits and Merck's expertise in clinical research
Merck and Co., the world's second larg'est drug maker by sales, and Sun Pharmaceutical Industries Ltd, the country's most valued pharma company, said on Monday they are form'ing a joint venture to develop and sell generic drugs in emerging markets, including India.
The deal underlines multi'national drug companies' in'creasing interest in emerging markets such as Asia Pacific, Latin America, Eastern Europe and Africa at a time when growth in developed countries, including the US and West Eu'ropean nations, has been shrinking.
Sun and MSD Pharmaceuti'cals Pvt. Ltd, Merck's Indian arm, did not disclose the fi'nancial details of the joint ven'ture.
Mint had reported on Mon'day that the two companies are close to signing a marketing partnership for the domestic market.
The joint venture, which is yet to be named, will leverage Sun's strength in drug devel'opment, manufacturing and local marketing, as well as Merck's expertise in clinical research, product registration and marketing, to tap emerg'ing markets.
"Merck's emerging markets strategy is driven by our focus on applying innovation across our business from introducing novel compounds to broaden'ing its focus on innovative branded generics," the compa'ny's president for emerging markets Kevin Ali said at a me'dia conference on Monday.
"By combining forces with Sun Pharma, we are comple- menting our innovative prod'uct portfolio with a solid foun'dation for addressing the di'verse needs of patients, physi'cians and governments across the emerging markets."
Sun's chairman and manag'ing director Dilip S. Shanghvi said Merck has an unrivalled reputation as a research-driven pharmaceutical company. "We are proud to be associated with them and look forward to working together."
Sun will utilize the services of its research unit Sun Phar'ma Advanced Research Co. Ltd (SPARC) to develop novel ge'neric drugs for the joint ven'ture. The venture may also market existing products of these companies, depending on the demand in emerging markets.
A joint board and leadership team, comprising senior man'agers from both companies, will run the collaboration, said Adam Schechter, president, global human health, and ex'ecutive vice-president, Merck and Co.
Emerging markets are ex'pected to drive 90% of the world's pharmaceutical growth.
The growing burden of chronic diseases such as car'diovascular ail'ments, diabe'tes and hepati'tis, along with an increasing population and economic prosperity, is leading to an increased de'mand for new generic drugs in these coun'tries.
Indian drug makers, who have a strong presence in the global generics market with the help of low-cost manufac'turing capabilities, are ideal partners for large multination'als to tap the emerging mar'kets.
Earlier, the world's largest drug maker Pfizer Inc. and British drug maker Glaxo SmithKline Plc have also clinched generic drug development and supply deals with In'dian companies such as Au-robindo Pharma Ltd, Claris Life Sciences Pvt. Ltd and Dr Reddy's Laboratories Ltd.
"These collaborations could be a two-way arrangement, too, such as the local company making licensing in certain new drugs from multination'als, and MNCs (multinational corporations) signing co-mar'keting as well as generic drug supply deals with local play'ers," said Muralidharan Nair, leader, pharma and health'care, at the consultancy Ernst and Young India.
India being a large and fast-growing emerging market it'self, several country-specific partnerships have also been signed recently.
In January, German pharma'ceutical company Bayer AG and Ahmedabad-based Cadila Healthcare said they were creating a joint venture com'pany to tap the local mar'ket. India's drug market, worth Rs 60,000 crore, is grow'ing at 18-20% annually.
Stock ana'lysts are not upbeat on the Merck-Sun deal.
"It's a good opportunity for both the companies in a long term, but no immediate upside seems in the shares," said Ran-jit Kapadia, senior vice-presi'dent, institutional research, at brokerage HDFC Securities Ltd.
The Sun's shares on Monday rose 2% to close at Rs 450.25 on the Bombay Stock Exchange, while the benchmark Sensex shed 1% to end at 19,262.54 points.