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Pfizer buys rights to OTC Nexium, may forge closer ties with AstraZeneca

Pays $250m for worldwide rights to sell heartburn drug from 2014

AZ Nexium production Macclesfield

Pfizer has agreed to pay $250m upfront to acquire over-the-counter rights to AstraZeneca's heartburn drug Nexium, which has started to be affected by generic competition.

Under the terms of the agreement Pfizer stands to get worldwide rights to OTC Nexium 20mg (esomeprazole) and would start selling it once patents on the prescription drug expire in 2014. 

The companies also said this may usher in a broader collaboration in the OTC sector, as they are "exploring the potential for a strategic partnership that would include similar agreements for other AstraZeneca prescription brands for which an OTC version might be appropriate".

To that end Pfizer has taken first-refusal on OTC rights for AstraZeneca's hayfever treatment Rhinocort Aqua (budesonide).

Nexium remains AstraZeneca's second-biggest product by revenue, bringing in $1.9bn in the first half of 2012

Sales were down 15 per cent on the prior year however, because of generic competition to Nexium in some markets - as well as other products, such as AstraZeneca's older Losec/Prilosec (omeprazole) brand - and supply interruptions at a plant in Sweden.

AstraZeneca will continue to manufacture and sell prescription Nexium and will supply Pfizer with the OTC product, which was filed for approval in Europe in June and is scheduled for a US submission early next year.

Tony Zook, executive vice president of AstraZeneca's global commercial organisation, said the deal would help the company "realise the substantial, long-term value of this brand and potentially other brands in our portfolio".

He added that Pfizer was the "optimal partner" for the Nexium brand given their "expertise in the sales and marketing of consumer health products".

The company's consumer health division has been growing strongly of late, adding 8 per cent to reach sales of $768m in the second quarter of 2012 ahead of a planned sale of nutrition products such as baby food to Nestle in the first half of 2013. 

The division, best known for brands such as painkiller Advil (ibuprofen) and multivitamin supplement Centrum, had been considered for sale by Pfizer along with its animal health and nutrition units which were put on the block last year.

But the deal with AstraZeneca signals its place as a key part of Pfizer's business – a position that could soon be cemented if, as planned, an OTC version of Pfizer's blockbuster Lipitor (atorvastatin) is launched.

Pfizer said it will take the $250m license fee as a charge in its 2012 results. AstraZeneca will also get milestone and royalty payments based on product launches and sales.

14th August 2012

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