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JERUSALEM—Teva Pharmaceutical Industries Ltd. continued its aggressive pursuit of generic dominance last month with a deal announced Jan. 20 between it and Basel, Switzerland-based Lonza Group Ltd., to establish a joint venture to develop, manufacture and market a portfolio of biosimilars. Through this, Lonza and Teva hope to "bring together highly complementary capabilities that will significantly advance the partners' efforts to secure a leading position in the emerging biosimilars market."

The joint venture is expected to commence activities during the first quarter of 2009, subject to receipt of any applicable regulatory approvals, and the companies will then, they say, cooperate to develop, manufacture and market a number of affordable, efficacious and safe generic equivalents of a selected portfolio of biologic pharmaceuticals.

Financial details of the agreement are not being disclosed. Reportedly, the companies will "continue to assess their cooperation under the joint venture as both Teva and Lonza retain the ability to explore additional opportunities in the area of biosimilars beyond the scope of this partnership."

"We had identified biosimilars as a major growth driver for Teva in our long-term strategy and have been augmenting our knowledge base, capabilities and infrastructure to position Teva as a leader in this market," says Shlomo Yanai, president and CEO of Teva, adding that the partnership bolsters Teva's biologics capabilities.

Lonza is an ideal partner for Teva in this field, he adds, because of its deep knowledge and experience in biopharmaceutical development, large-scale manufacturing and state-of-the-art manufacturing facilities.

The field of biosimilars is a "natural extension" of Lonza's existing life-sciences portfolio, and represents the next strategic step for the company, according to Stefan Borgas, CEO of Lonza. "With Teva, we have found the right strategic partner to develop this new activity, which will deliver new opportunities for both companies. We are confident that our capabilities in the area of biologics manufacturing will add value to this joint venture; while at the same time, the agreement ensures that we will be able to continue to fully support the development of new technology and business of our existing innovator customers."

The timing of such a move may be very good. In Europe, some biosimilars have already been approved and are on the market, though the United States is still discussing a regulatory pathway for follow-on biotech treatments—something that may change quickly with the new administration of President Barack Obama.

"There is no doubt that biogenerics has become very sexy with the beginning of the government of Barack Obama and Democratic control in both houses of Congress," according to Yoav Burgan, an analyst at Israeli brokerage firm Leader Capital Markets, writing in a note to clients. "It's possible that in 2009, we will finally see the hoped-for creation of a regulatory path for approving biogeneric drugs in the United States."

A Jan. 22 analysis posted by Gerson Lehrman Group on its Web site, written by a member of its GLG Healthcare Council, weighed in with some pessimism about the deal, noting "Isn't this like the nth deal Teva has signed for biosimilar capability…No commentary so far has asked 'hey, what are you giving up here and what don't you have to do this yourself?'… biogenerics might be far too complex and too expensive for most generic companies. I think the implications are that generic companies will have a tough time finding any competitive advantages over a brand company set on making biogenerics."

"Over the next 10 years, biological products worth around $50 billion will lose patent protection," Zuercher Kantonalbank analyst Martin Schreiber told the Dow Jones news service Jan. 20. "With [this] deal, Lonza can bind a large customer to itself and increase long-term visibility for capacity utilization." DDN

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Volume 5 - Issue 2 | February 2009

February 2009

February 2009 Issue

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