Pfizer walks away from $350M insulin pact with India's Biocon

In a move widely viewed as a bad blow to India's biggest biotech, Pfizer ($PFE) has written off its $200 million upfront payment to India's Biocon ($BIOCON)--right along with all the licensing rights involved in their biosimilar insulin development deal.

The deal termination, which Biocon's Kiran Mazumdar-Shaw characterized in Tweets as both amicable and the result of changing strategies, leaves Biocon without a major player to help break into the U.S. and European markets. And it leaves Pfizer still casting about for an effective strategy to confront dominant diabetes drug developers at Eli Lilly ($LLY), Novo Nordisk ($NVO) and Sanofi ($SNY).  

"Pfizer may have seen difficulties in selling insulin in US and Europe given dominance of three players. If even the world's biggest pharma player doesn't want to do it, then surely for Biocon penetrating those markets will be a big headache," Hitesh Mahida, an analyst at Fortune Equity Brokers, tells MoneyControl.com. Biocon's shares dropped 8% on the news.

In the fall of 2010 Pfizer and Biocon captured worldwide headlines with their partnership to develop insulin biosimilars. In addition to its down payment of $200 million, Pfizer also agreed to fork over $150 million in milestones and a stream of royalties from new products.

Mazumdar-Shaw, who built Biocon into India's biggest biotech and developed grand plans for the global diabetes market, showed no sign today of backing down from her plan. "Biocon will continue to work with its existing partners in several markets and will pursue a commercial strategy on its own and through new alliances in other markets." said Mazumdar-Shaw in a statement.

"Pfizer continues to be dedicated to developing a broad portfolio of biosimilars medicines, including monoclonal antibodies and recombinant proteins products, both internally and through collaborations" said Diem Nguyen, Pfizer's general manager for biosimilars. "In addition, we will continue to be active in our own research and business development efforts for diabetes, which represents a huge unmet medical need, and we remain committed to seeking new solutions to help physicians and patients."

There are broader implications for the entire Indian biopharma market. Despite its reputation for top scientific talent and low-cost R&D, India has been hampered by its reputation for playing fast and loose with intellectual property rights. On Monday that rep was underscored by a patent office decision granting Natco the right to make and sell Nexavar, a blockbuster cancer drug controlled by Bayer. The Indian ruling cited Nexavar's high price tag as the reason for the decision to open the market to a generic competitor. With India's highest profile pharma partnership now on the rocks, the emerging market's ability to work on a collaborative basis with global pharma remains questionable.

- get the press release
- here's the Reuters story
- read the report from MoneyControl.com

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