Pliva of Croatia, the largest pharmaceutical company in Eastern Europe, has announced plans to sell the overactive bladder treatment Sanctura
(trospium), a move which will mark its exit from the proprietary drugs market.
As a result of “an in-depth strategic review,” Pliva’s US subsidiary Odyssey Pharmaceuticals will sell the drug to privately-held US firm Saturn Pharmaceuticals, for up to $140 million. Under the terms of the deal, Pliva will get a $45 million upfront payment, with the rest being contingent upon the achievement of sales milestones.
Interestingly, Pliva noted that the divestment will result in an exceptional non-cash charge of about $93 million, the amount it has lost on Sanctura, which was launched in the USA with partner Indevus Pharmaceuticals last year [[24/08/04d]]. The drug has struggled to gain any significant market share against stiff competition from Novartis’ Enablex (darifenacin) and GlaxoSmithKline’s Vesicare (solifenacin).
Chief executive Zeljko Covic said: “exiting the proprietary segment will allow us to refocus on generics, which we believe will deliver greater long-term value for shareholders and enhance Pliva’s overall competitiveness and market position.”
The firm added that the divestment of Odyssey’s remaining portfolio, which includes drugs already marketed for the treatment of alcoholism, depression and asthma, as well as eight products in the pipeline, will occur within the next few months and that it will have a positive impact on 2005 earnings. It is clear that the launch of Sanctura certainly hurt Pliva’s first-quarter earnings, as did the re-alignment of its pharmaceuticals business into generic and proprietary divisions [[06/05/05e]].
And, while the news of the divestment boosted the firm’s stock price, some analysts were less impressed. Reuters reports the comments of Frances Cloud at Nomura who said in a research note that “getting rid of Sanctura does not obscure the fact that Pliva’s move into speciality pharmaceuticals has proved a complete failure and a spectacular waste of shareholders’ money.”
Mr Covic was much more upbeat, saying: “by reinvesting all resources and efforts into generics, we believe that we can further enhance Pliva’s overall competitiveness and market position.” However, the company is also facing a major decline in the royalty revenues for its blockbuster antibiotic Zithromax (azithromycin) in the USA, where it is sold by Pfizer, as its patent protection expires in the US in November.