Hetero set to reap gains from Aspen-GSK deal

Anju Ghangurde

Mumbai, Oct 8: The Hyderabad-based Hetero Drugs is set to reap strong gains, after British multinational, GlaxoSmithKline (GSK), on Sunday, agreed to grant a voluntary licence to Aspen Pharmacare in South Africa for AIDS drugs — AZT, 3TC and Combivir.

Hetero had earlier sewn a deal with Aspen under which it will supply the active pharmaceutical ingredients (APIs) and the technology for the finished formulation of a range of AIDS drugs. Aspen has also secured exclusivity for the SADC region on all future technology that Hetero develops.

Responding to The Financial Express from London, Hetero Drugs director (business development) Dharmesh M Shah said: “Aspen will outsource the APIs for these drugs from us. It’s a huge business. We expect to complete submission of dossiers in the next two to three months. Supplies are expected to commence in the first quarter of next year.”

A Reuters report added that Shire Pharmaceuticals, which licenses 3TC to GSK, will waive their rights to royalties and Aspen will pay 30 per cent of net sales to NGOs involved in South Africa’s AIDS war. Aspen already has licences on two AIDS drugs from Bristol-Myers Squibb.

While the exact value of Hetero’s supplies could not be got, analysts claimed that it could be well over $50-$75 million over a period of time.

They, however, cautioned that the AIDS drugs business was increasingly becoming a volumes game with shrinking margins eroding its attractiveness.

“GSK’s move may have ripple effects elsewhere. Besides setting a precedent and mobilising public opinion, there could be suitcase exports too, “ an analyst added. Mr Shah had earlier said that Hetero will make supplies on a “cost recovery” basis to Aspen. Hetero manufactures an advanced generic anti-retroviral range and currently supplies its anti-AIDS drugs both to Brazil and Argentina.

Aspen had been chosen because of its manufacturing capabilities. “Aspen’s volume throughput and the consequent economies of scale have resulted in globally competitive conversion costs,” Mr Shah had earlier said.

Aspen Pharmacare CEO Stephen Saad had said that Hetero had enabled it to access the full spectrum of anti-retrovirals and not just one or two molecules. “This spectrum is critical to the effective treatment of HIV/AIDS”. Aspen has accessed HIV/AIDS intellectual property via Hetero Drugs, in order to supply anti-retroviral products in South Africa at prices that are atleast as competitive as that Brazil enjoys,” he had stated.

Hetero had earlier offered to supply Medecins sans Frontieres (MSF) a basket of approximately eight anti-AIDS drugs, including nelfinavir, indinavir, abacavir, zidovudine, ritonavir and efavirenz, at huge discounts to the prices offered by the multinationals that hold the patents on these products. This was over and above Hetero’s $347 (per patient, per year) supply proposal to governments and the MSF for a cocktail of three anti-AIDS drugs.