Glenmark, Nap Pharma spar over anti-diarrhoea drug
Dec 13 2011 , Mumbai
BSE-listed Glenmark said Napo Pharma's claims of breach with regards Crofelemer are unfounded. Reacting to the news, shares of Glenmark lost four per cent on BSE, the worst fall in a month. Glenmark had the licence to sell the drug undergoing clinical trials in 140 emerging countries globally.
Surajit Pal, research analyst-pharma at Elara Capital said, “The product has a market size of $75 million-80 million (Rs 400 crore-427 crore) in the 140 countries Glenmark would have distributed. The share drop is due to the high level of expectation.”
Crofelemer, Napo Pharma’s lead compound is under development for four distinct product indications: for diarrhoea-predominant irritable bowel syndrome (IBS), for AIDS-related diarrhoea, acute infectious diarrhoea and paediatric diarrhoea. The US FDA has granted fast-track status to the application for IBS and HIV conditions, Napo said on its website.
“This move will not hamper Glenmark’s balance sheet and EPS impact would be around 40-50 paisa per share. Having said that, going forward we might even see Glenmark going into litigation or partner with Salix Pharma (another ex licensee for Crofelemer),” said Sidhant Khandekar, analyst at ICICI Direct.
Napo Pharma had terminated the pact on November 10, according to a press release posted on the US-based firm’s website. That would put at risk Glenmark’s ambitious plans to exclusively market the drug that is produced from the bark latex of the Amazonian tree — Croton lechleri, sustainably harvested in many countries in South America.
Napo Pharma was the initial developer of the molecule who licenced it out to Glenmark and Salix. “Napo believes Glenmark has materially breached the collaboration agreement by failing to fulfill its basic responsibilities to develop and commercialise this important drug,” said William A Brewer III, counsel for Napo in a press statement. “Most notably, Glenmark has not filed a single application to register this drug in any country in the world, despite having had the licence for more than six years.”
Glenmark expected peak sales of $80 million from its licenced geographies for HIV-related diarrhoea indication alone, according to Napo. The US firm also claims on its website that, it has allied with relief organisations to provide affordable Crofelemer for paediatric diarrhoea to resource-constrained populations in developing territories
Glenmark, in a press release on Tuesday, denied Napo had any basis to terminate the agreement. “Glenmark continues to develop Crofelemer for all indications that we have rights to. Filing timelines will be dependent on the availability of the complete regulatory dossier data. We anticipate such filings to begin for rest of the world markets in 2012 and hope to obtain approvals by H1 2013, as planned,” said a press note by Glenmark. Napo on its website, however, said that Glenmark anticipated regulatory approvals starting in 2010.
“If approved for all diarrhoeal indications, Crofelemer could be the most utilised pharmaceutical product in the world,” Napo’s website quotes the Gates Foundation, as stating. “Although the event does create hurdles to Crofelemer commercialisation, we believe that Glenmark would prevail in case the arbitration leads to litigation,” said a research report by Nomura.
Glenmark, one of the most valuable listed pharma companies in India, had in August 2011 filed for arbitration claims against Napo Pharma to prevent the latter from distributing Crofelemer in Glenmark’s territories through relief agencies. The Indian company in July 2011 received $15 million (Rs 80 crore) from Salix Pharma towards upgrading the manufacturing facility for Crofelemer and was expected to get another $6.6 million (Rs 35.2 crore) in five equal instalments.