Glaxo Licenses AIDS Drug to Generics Firm

Pharmaceutical giant GlaxoSmithKline PLC has announced it will allow a South African generic drug maker to produce and market three of its patent-protected AIDS medicines. The move is expected to have a broad impact on pharmaceutical industry economics in developing world markets.

Under the deal, United Kingdom-based Glaxo will grant a license to South Africa-based Aspen Pharmacare Ltd. to sell generic versions of AZT, 3TC and Combivir within South Africa to public and government sectors and to certain non-profits and charities. In what appears to be the first such licensing of a patented AIDS drug to a generic drug maker to increase access to the medicines, Glaxo will waive its rights to any royalty payments. Instead, Aspen, South Africa's largest generics maker, has agreed to pay a 30 percent fee on net sales to one or more nongovernmental organizations for AIDS education and prevention. Shire Pharmaceuticals Group PLC, also of the United Kingdom, which licenses 3TC to Glaxo, also agreed to the arrangement. AZT is also know as Retrovir; 3TC as Epivir; and Combivir combines the two medicines. Steven Saad, group CEO of Aspen, said his company could make a generic version of Combivir for between $1 and $1.50 a day.

Under pressure -- and facing the threat of generic drug makers like India's Cipla Ltd. -- several major pharmaceutical companies have slowly cut the price of AIDS drugs, some even to cost, during the past 18 months. Glaxo's AIDS drugs are the most heavily used in South Africa, and previously the company had cut the price of Combivir in the nation to $2 a day for the public sector, nongovernmental organizations and certain private employers. Although this compares to $17.23 a day for the drug in the United States, the government was not buying. Howard Pien, Glaxo's president of international pharmaceuticals, would not qualify the amount the company would lose under the new arrangement but said, "it's not going to be material." Glaxo will continue to sell the three drugs in South Africa's private sector market.

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