Karela Fry

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Cipla takes on cancer and the pharma industry

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ET reported a stunning move by Cipla:

On Thursday, Cipla cut prices of key cancer drugs by nearly 75%, an astounding, one-shot reduction that is certain to unsettle the industry and trigger a price war. Kidney cancer drug Sorafenib (sold under brand name Nexavar by Bayer) will now be available at 6,840 for a month’s supply, down from 28,000. Lung cancer drug Gestinib (sold under brand name Iressa by AstraZeneca) will cost 4,250, down from 10,000, while prices of Temozolamide (sold by German pharma company Schering), used to treat brain tumour, have been cut from 20,000 to 5,000.

“Yes we are cutting the prices; we are being humanitarian, but at the same time we are not doing any charity,” Hamied told ET on Thursday. “Doctors in India link the quality of drugs to the price of drugs; we want to remove that misconception,” he added.

The move is expected to trigger a sharp reaction from other players in the 1,500-crore cancer drug industry and pose a serious challenge to multinationals who sell patented, expensive drugs and Indian companies whose generic drugs are cheaper but not as cheap as Cipla’s. Bayer, for instance, will not only have to contend with Natco, but also Cipla, whose prices are now the cheapest.

“It’s a smart move by Cipla. With this, they will reach many more patients, and will also be able to garner greater market share,” said Anjan Sen, director-healthcare, Deloitte Touche Tohmatsu India.

Why this timing? This report in BS should be read together with Cipla’s declaration:

Drugmaker Bayer has said that it is challenging an order from the patents office that allowed Hyderabad-based Natco Pharma to sell a cheap generic version of the German firm’s drug Nexavar in India. Nexavar is used in the treatment of cancer of the kidney and liver.

The patents office had stripped Bayer of its exclusive rights to sell Nexavar, saying most Indians could not afford it.

It told Natco Pharma to sell the generic drug significantly more cheaply and pay Bayer a 6% royalty on sales.

Bayer said it had appealed against the ruling.

“We will rigorously continue to defend our intellectual property rights, which are a prerequisite for bringing innovative medicines to patients,” a company spokesman said.

Clearly Cipla is trying to create an interesting variation on third-party interests. If the ruling of the patent office can be shown to really widen the scope of the applicability of the treatment, then appeals against it will be less likely to succeed. The result will be a strengthening of the generics market: exactly the business that Cipla is in. Great strategy. But is it a short term win?


Written by Arhopala Bazaloides

May 6, 2012 at 4:27 pm

One Response

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  1. […] The article also draws attention to an earlier case: […]

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