The move is also expected to intensify price competition between the British multinational and the Rs 541-crore Cipla, the only two major players in this particular anti-AIDS formulation segment. Glaxo's Retrovir (zidovudine) brand commands a market share of around 12 per cent and is growing a rate of 542 per cent (due to newness of the market), as per ORG estimates as of December 1998.

Cipla had recently slashed prices of its zidovudine-based formulation, Zidovir, by 25 per cent, taking the price differential between its brand and Glaxo's Retrovir, to over 200 per cent. While Retrovir's pre-budget price stood at approximately Rs 49 per tablet, Zidovir prices were pegged at around Rs 15 per tablet, down from earlier prices of Rs 20each.

Glaxo, it is believed, imports most of its zidovudine requirements for the domestic market and the reduction in customs duties is expected to translate into direct improvements in the earnings of Retrovir. Cipla, on the other hand, manufactures the bulk zidovudine at its facility in Bangalore, while the formulation is done at the company's Vikhroli facility in Mumbai.

While analysts expect Glaxo India to pass on the benefit of the duty reduction to AIDS patients, the possible price cuts, they say, are unlikely to match Cipla's price levels mainly due to the "basic research efforts" involved. "Glaxo may possibly examine price levels of around Rs 35 for Retrovir, though this may still not make a major dent on Cipla's position," an analyst said. No official confirmation could, however, be got on Glaxo's pricing strategy.

The Wellcome group (now part of Glaxo Wellcome) holds the original patent for zidovudine, though this appears to be under a cloud with NIH (an institute reportedly actively involvedin the drug's development) apparently vying for a share of the honours.

Analysts, however, point out that while local manufacture of zidovudine formulation attracts regular excise levies, zidovudine imports are now duty free. "The incentive to undertake local manufacture may probably no longer exist," they add.

Zidovudine is indicated for the treatment of HIV infection when antiretroviral therapy is warranted. The drug is also indicated for the prevention of maternal-foetal HIV transmission as part of a regimen that includes oral zidovudine beginning between 14 and 34 weeks of gestation, intravenous zidovudine during labour and the administration of zidovudine to the new-born after birth. The drug, studies indicate, reduces maternal transmission by levels as high as 51 per cent.