AstraZeneca says will be picky in emerging markets

By Ben Hirschler

LONDON, March 16 (BestGrowthStock) – AstraZeneca (AZN.L: ) expects
double-digit growth in emerging markets, the new battleground
for Big Pharma as sales in Western markets stall, but said on
Tuesday it would be much more selective than some of its rivals.

The drugmaker is not planning a wholesale rush to sell
branded generics in the developing world. Instead, it plans to
focus on around 100 medicines in 30 markets where it can achieve
favourable pricing.

“We will be very selective in branded generics,” head of
global commercial operations Tony Zook told reporters ahead of a
briefing for investors.

Cheap off-patent medicines sold in high volumes in emerging
markets under a multinational brand name are a growing target
for major drugmakers. But some investors and analysts worry
about the impact on margins of this move down the value chain.

AstraZeneca struck its first branded generics supply deal,
with India’s Torrent Pharmaceuticals (TORP.BO: ), last week and
Zook said other deals could follow, although the group’s
strategy was not dependent on acquisitions.

Overall, branded generic medicines would account for only 10
to 15 percent of total emerging market sales by 2014, Zook said.

A key leg of AstraZeneca’s strategy will continue to be
building sales of products developed in its own laboratories,
some of which, like ulcer pill Losec, are off patent but still
growing strongly.

Emerging markets are forecast to contribute around 70
percent of pharmaceutical industry growth in the next five
years, making them an enticing target.

Other major drugmakers have been more proactive than
AstraZeneca, which generated 13 percent, or $4.35 billion, of
revenues in emerging markets in 2009.

Zook reiterated that the company intended to increase this
to 25 percent by 2014 — yet rivals such as Sanofi-Aventis
(SASY.PA: ), Novartis (NOVN.VX: ) and Bayer (BAYGn.DE: ) are already
at around that 25 percent level.

The more cautious approach, particularly on generics,
reflects an acute awareness of profitability. AstraZeneca has
increased its margins in emerging markets to around 72 percent
of its level in established markets in 2009, from 55 percent in
2004, and Zook said he didn’t see significant variation in
margins going forward.

Investing

(Editing by Dan Lalor)

AstraZeneca says will be picky in emerging markets