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Gilead Close to Sending $84,000 Drug to Poor Countries
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Shares of Gilead Sciences (GILD -Analyst Report) dropped 1.4% to close the trading session on Sep 5 at $105.36 following a Bloomberg report claiming that the biopharmaceutical major will ink a licensing deal with generic players in order to make its blockbuster hepatitis C drug Sovaldi available in approximately 80 developing nations such as India and Pakistan at low cost.
Bloomberg News
Gilead Close to Sending $84,000 Drug to Poor Countries
By Ketaki Gokhale and Robert Langreth September 05, 2014
Sovaldi, Gilead Sciences Inc.'s hepatitis C drug, costs $1,000 per pill, or $84,000 for a 12-week treatment course. Photographer: Bob Ecker/MCT via Getty Images
Gilead Sciences Inc. (GILD:US) is close to a pact with generic drugmakers to bring low-cost versions of its $84,000 hepatitis C drug Sovaldi to about 80 developing countries including India, Indonesia, and Pakistan.
The broad licensing deal could be completed as soon as mid-September and would allow the generic manufacturers to produce Sovaldi and an experimental pill that combines Sovaldi with another Gilead hepatitis drug, said Gregg Alton, an executive vice president for Gilead, in a telephone interview.
The company plans to sell the branded Sovaldi itself in certain lower income countries, including India, at $900 for 12 weeks of therapy. Patients stay on the drug for 12 or 24 weeks. In the U.S., the drug sells for $1,000 a pill, or $84,000 for 12 weeks, a price that has drawn criticism from pharmacy benefit managers, as well as questions from U.S. Senators Charles Grassley and Ron Wyden, who have demanded detailed answers on how Gilead came up with its price.
STORY: Britain Has No Problem Paying for Expensive Hepatitis C Drugs
Getting multiple generic companies involved "is critical" to ensure enough capacity to produce large amounts of the drug and distribute it widely in developing countries, said Alton, who wouldn't confirm the companies that are part of Gilead's discussions. "We are talking to five or six companies right now and we will see whether all six sign a license with us," he said.
Among the companies that have been involved in the talks are Hetero Drugs Ltd.,Mylan Inc. (MYL:US), and Cipla Ltd. (CIPLA), according to a person familiar with the talks, who asked not to be named because the discussions are private. The person said that countries likely to be in the agreement also include South Africa, Vietnam, Egypt, and Mongolia.
Gilead shares declined 4.9 percent to $101.57 at 11:15 a.m. New York time. The stock gained 75 percent in the 12-month period ending yesterday.
'Several Partners'
"We are talking to them," Cipla Chairman Yusuf Hamied said in an interview on Aug. 21, referring to Gilead. "Other companies are talking to them. Everybody wants a product. There should be plenty of potential for several partners. There's a capability and availability to supply."
Hamied said he didn't know the price his company might sell the drug for because it hasn't scaled up manufacturing yet and doesn't know the final terms of any agreement. The $900 price for 12 weeks of Sovaldi which the Egyptian government was able to secure from Gilead earlier this year, "can be taken as a benchmark," he said.
A spokeswoman for Mylan declined to comment in an e-mail. Hetero declined to respond to e-mailed questions. Cipla spokesman Anant Atal said yesterday that the company doesn't comment on partner discussions and is "constantly" in talks with multiple parties on potential opportunities.
Liver Complications
The proposed hepatitis drug agreement is similar to a licensing deal that Gilead has had in place since 2006 for generic companies to sell versions of its anti-HIV drugs in lower-income countries. Once the deal is completed, inexpensive versions of Sovaldi won't be available immediately, as the medicine will have to be approved in various countries, a process Gilead is working on intensively, Alton said.
As many as 150 million people worldwide have chronic hepatitis C infection and half a million people die from liver complications of the disease every year, according to the World Health Organization. The regions most affected by the disease are Central and East Asia and North Africa, according to the WHO.
The licensing agreements would be legally binding documents that would permit the sale of product only in the specified countries, and the generic companies would agree to work with Gilead to minimize diversion of product outside those countries, said Nick Francis, a spokesman for Gilead, the world's biggest maker of HIV treatments.
Lengthy Negotiations
Gilead, based in Foster City, California, has been talking to generic companies and nongovernmental organizations for months to iron out a deal to get the drug to developing countries, Alton said. A major subject of discussions has been exactly how many countries will be included in the agreement, he said.
In response to input from groups such as Doctors Without Borders, Gilead increased the number of countries included to about 80 from an original proposal of more than 60, and may add a few more before the pact is finished, Alton said. The generic drugmakers will also pay a single-digit royalty on sales of Sovaldi as part of the deal, he said.
The deal has taken time because "there are a lot of negotiations occurring," Alton said. "It is not as if we say take it or leave it."
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