Ranbaxy's ANDA transfer saw Teva launch Lipitor: PharmAsia

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Ranbaxy's ANDA transfer saw Teva launch Lipitor: PharmAsia

The deal between pharma majors Ranbaxy and Teva, for the sale of generic version of the blockbuster cholesterol drug – Lipitor left many in the industry surprised. Vikas Dandekar, Bureau Chief, PharmAsia News tells CNBC-TV18 that the contours of the deal revolved around three scenarios at best.

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The deal between pharma majors Ranbaxy and Teva, for the sale of generic version of the blockbuster cholesterol drug - Lipitor left many in the industry surprised. Industry sources have told PharmAsia News that Ranbaxy forged the Teva-Lipitor deal as a back-up plan to try and ensure on-time launch.

Vikas Dandekar, Bureau Chief, PharmAsia News tells CNBC-TV18 that the contours of the deal revolved around three scenarios at best. According to his sources, Ranbaxy and Teva actually inked an agreement way back in 2010 so that if they were any regulatory hurdles, Ranbaxy would be able to avert them.

Teva in turn paid a lump sum to Ranbaxy and Ranbaxy is in a sense paying Teva back the money that Teva had pumped into Ranbaxy in the first place.

Below is an edited transcript. Watch the accompanying video for more.

Q: There was a lot of confusion and surprise when the Ranbaxy and Teva arrangement news was broken. What are the contours of the deal that's been struck by the two?

A: This is very fascinating the way it all worked out. In 2008, Ranbaxy faced the heat of the FDA when a lot of negatives came on the compliance issues. Somewhere in 2009, Ranbaxy realized that it's not going to be a very easy sailing and the resolution of all the issues will take time. So probably both companies, Teva and Ranbaxy started talking.

Finally a deal probably was signed in 2010 but the probability of all the scenarios were discussed, primarily one which was taken into consideration was that failing if there are any regulatory headwinds that it faces, Ranbaxy will transfer its Atorvastatin filings to Teva and in return Teva will pay Ranbaxy a lump sum amount.

The amount is something that I am not very familiar with and it's difficult to obtain that. What Ranbaxy has suggested in its release of December 1 is that pursuant to an agreement, Ranbaxy will share some portion of its profits. To the extent that I know from my sources, it's the same lump sum amount that Teva is getting back from Ranbaxy, plus a little more just for the fact that Teva has taken an interest in Atorvastatin filings.

Q: So your saying Ranbaxy and Teva actually inked an agreement way back in 2010 so that if they were any regulatory hurdles, Ranbaxy would be able to avert those and also that Teva paid a lump sum to Ranbaxy and Ranbaxy is in a sense paying Teva back the money that Teva had pumped into Ranbaxy?

A: Exactly - that's the entire genesis of the agreement. There were a couple of other likely scenarios also discussed. One scenario discussed was that probably Ranbaxy and Teva will both launch and then the other one which was discussed was that what if Ranbaxy manages to have its filings approved from Ohm Laboratories which is exactly what happened. That was the most important aspect for Ranbaxy to get approved.

So now that that has played out, they will still have a say in some parts of Ranbaxy's profits plus a little more. But this definitely doesn't have anything to do with any destination issues nor has it got anything to do with raw material supplies. So, all of that is rejected. What comes out is this.

Q: Is there a precedence of this sort of an arrangement being worked out by two pharma majors in the past to perhaps avert any regulatory uncertainty?

A: Not exactly the same but Ranbaxy has faced a similar situation. In the case of Tamsulosin and Boehringer Ingelheim product Flomax it was still not sure and it didn't get approval in time following which it had a deal with Impax Laboratories and Impax was able to launch the product.

So it has been a very shrewd, tactical business strategy in terms of having a monetization in place at least. It's not all that risky. There was a lot of optimism right from the beginning that Ranbaxy will be able to monetize its first to file. This is a big example of how it was able to handle it.