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Pharma news in brief

Our weekly round-up of news affecting the industry.

Novartis buys Hexal

Novartis has bought Hexal for $8.3bn, in a cash deal which establishes the Swiss-based pharma company as the biggest global generics manufacturer. The acquisition of privately-owned Hexal, the second largest generics company in Germany, and 67.7 per cent of the firm's US affiliate Eon Labs, concludes chief executive Daniel Vasella's five-year strategy to create a global business selling 'copy cat' versions of off-patent drugs.

Novartis will also make a tender offer for the rest of Eon Labs at $31 per share, or approximately, $1bn. Both companies will merge with Sandoz. The deal will create synergies of around $200m-a-year within three years of completion. A number of departments will be consolidated as a result of the merger; however, Novartis said that jobs created through growth would partially offset redundancies.

Price hike for chemists

Chemists will pay more for some of GlaxoSmithKline's (GSK) top-selling drugs following a decision by the company to increase prices. The company has said that the money will be used to reduce the price of older drugs that have generic competition. The price rise will comes into force on April 1 when GSK plans to remove the 12 per cent discount that it gives on patent-protected drugs.

The company has denied claims that it is attempting to bypass the 7 per cent price reduction on branded drugs introduced by the government in 2004, as the additional funds will go towards slashing the prices of 25 drugs. GSK has come under fire from chemists and the Pharmaceutical Services Negotiating Committee is discussing the move with the Department of Health. Generic manufacturers have accused GSK of cross-subsidising its products 'unfairly'.

Canada considers export ban

The Canadian government is considering a total ban on exports of price-controlled patented drugs in an attempt to preserve the country's lower prices for medicine, health minister Ujjal Dosanjh has revealed. The ban is just one of a clutch of options, which threatens the existence of Canada's billion-dollar mail order pharmacy market in the US, the government is looking at. Under the ban, the price set by regulators would only apply to the drug when it is sold in Canada. Each patented drug currently goes to the Patented Medicine Prices Review Board (PMPRB).

If the ban goes ahead, there could be an additional requirement that drugs approved by the PMPRB for sale within a certain price range be 'absolutely and just for domestic consumption', effectively prohibiting them from cross-border sale.

30th September 2008

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