Finance News

Bill Clinton taps Indian pharma

At a time when pharma major Ranbaxy is being accused of potential violations of manufacturing regulations by the US FDA, one of the world's largest HIV/AIDS initiatives, funded by the Clinton Foundation in the US, is tying up with Indian pharma companies for high-quality, low-cost drugs.

Paradoxical it might seem, but former US President Bill Clinton, joined by the UN special envoy on malaria and the chairman & CEO of Novartis, has announced agreements with six companies, including four Indian pharma majors, to bring down the cost of a leading artemisinin-based combination therapy (ACT) for Malaria by 30%.

The four Indian companies are Ipca Labs, Cipla, Calyx Chemicals and Mangalam Drugs, all based out of Mumbai. The other companies are China's Holley Pharmaceuticals and PIDI Standard.

The Clinton HIV/AIDS Initiative, or Chai (part of the Clinton Foundation) agreements with suppliers are structured to reduce the volatility of artemisinin, the key ingredient for ACT production, by 70% and to translate this into affordable and stable pricing. Artemisinin prices have fluctuated from $150/kg to $1,100/kg over the past four years. The agreements will help ensure that high-quality, low-cost drugs are sustainably available to meet growing patient demand.

Chai has also negotiated a price reduction of more than 30% for artesunate-plus-amodiaquine, a key ACT, with Ipca Laboratories Ltd (India) and Cipla (India).

The new average price of 48 cents across the three available pack sizes will be extended to the 69 countries that are members of Chai's procurement consortium.

Ipca and Cipla have also agreed to match today's best price for artemether-lumefantrine from Novartis. The average price across the four available pack sizes is 91 cents.

Under the agreements negotiated by Chai, Ipca and Cipla will also offer artemether-lumafantrine, the other most common ACT, at or below an average ceiling price of 91 cents, the current price available from Novartis. Of the other manufacturers party to the agreements, Calyx and Mangalam are active ingredient suppliers and Holley Pharma and PIDI are suppliers of the raw material, artemisinin.

"I come from a family of farmers and know first hand about both agricultural production and pharmaceutical production," said Premchand Godha, managing director of Ipca Labs. "Poor planning, bad weather and other factors can dramatically influence price and cause volatility. We appreciate the Clinton Foundation's holistic approach to reducing that volatility and making lower drug prices sustainable in the long term," he added.

"Since 2001, Novartis has supplied more than 180 million treatments of Coartem to malaria-endemic countries," said Daniel Vasella, chairman & CEO of Novartis. Up to 500 million people around the globe need malaria treatment each year. The agreements make prices for malaria drugs more affordable and sustainable to help meet growing global demand.

The scale-up ACT access has been challenged by significant volatility in the artemisinin market. Beginning in 2004, a rapid but uneven increase in ACT demand led to the price of artemesinin fluctuating by more than 700%.

Novartis, the dominant ACT supplier to date, absorbed much of the financial impact, shielding patients from higher prices, which would have narrowed access. However, acting alone, Novartis cannot meet increased future global demand. The fresh agreements will help to mitigate risk so new suppliers can enter the market.