Alpharma looks to India for production

Alpharma has signed an agreement with Shasun Chemicals & Drugs Limited, based in Chennai, to develop, manufacture and supply generics and APIs for exclusive sale by Alpharma. The US company said the deal would accelerate the expansion of its generic product pipeline.

While offshoring of manufacturing is becoming more commonplace in the generic sector, Alpharma is unusual for its wholehearted embrace of this approach. The agreement with Shasun follows a similar development and manufacturing arrangement with Orchid Chemicals & Pharmaceuticals, announced in February.

Explaining the move, Alpharma said the numbers speak for themselves. "Industry data suggest that manufacturing costs for Indian pharmaceutical companies are more than 50 per cent below US and European multinational companies, and drug development costs are a fraction of US costs,"​ said Ingrid Wiik, Alpharma's chief executive.

Under the terms of the agreement, Shasun will develop APIs and final formulations, and manufacture finished products for exclusive sale by Alpharma worldwide, with the latter taking responsibility for regulatory filings. During the period of exclusive sales by Alpharma, the two companies will share profits and Alpharma will reimburse Shasun for certain development and manufacturing costs.

The collaboration initially aims to develop 10 products with global brand sales exceeding $20 billion (€16bn), but additional products may be added over time, said Alpharma. Product launches are scheduled to begin in 2007.

Wiik said the Indian alliances "give us access to low cost manufacturing as well as new markets, while allowing complete control of the supply chain for an incremental stream of new products."​

The combination of these two agreements, which will supplement our internal development efforts, is expected to result in twenty new product launches beginning in 2007, she added.