Pliva exits branded drug business

Pliva, which is facing a major financial impact from the loss of patent protection on top-selling antibiotic azithromycin in the US, has decided to sell off its recently-launched drug for overactive bladder, Sanctura (trospium).

The patent protection on azithromycin in the US - where it s sold by Pfizer as Zithromax - is due to expire in November. This hits Pliva in two ways; firstly, its lucrative royalty stream from Pfizer for the drug will be cut, and secondly the bulk price of the active ingredient is expected to fall dramatically, affecting Pliva's pharmachemicals unit. In the first quarter of 2005, bulk azithromycin accounted for $38m (€30m) out of total sales of $48m at the pharmachemicals unit, and also drove a 78 per cent hike in royalty revenues to $71m.

Overall, first quarter generics sales rose 13 per cent to $192m, although Pliva's proprietary business saw a 27 per cent decline in turnover to $21 million, which it attributed to its recent marketing focus on Sanctura at the expense of its other products.

As part of the new restructuring, Pliva's US sales subsidiary Odyssey Pharmaceuticals will divest Sanctura to a privately held company for up to $140m, including an upfront payment of $45m and contingent payments of up to $95m upon the achievement of sales milestones. The remainder of Odyssey's branded drug portfolio will be sold off 'within the next few months', said Pliva. The company's pipeline includes drugs for cancer, asthma and fungal infections.

But the exit from the proprietary business should not be viewed as a commoditisation of the business, as Pliva has recently embarked on a major push into generic versions of biologic drugs, a multibillion dollar market that is just on the brink of opening up as governments work out regulatory routes to allow these drugs to reach the market.

Pliva has staked a claim to the new territory through product development agreements with Barr Laboratories and Mayne Pharma.