Award of the new manufacturing contract is good news for Pliva, which has relied on bulk supply of azithromycin and royalties on sales of the drug as two of its primary revenue generators.
But Pfizer's patent protection for the antibiotic expires in the US market in November, putting this revenue stream in jeopardy as sales of the branded product drop, cutting into the royalty stream, and the availability of generics cuts into the price of the bulk active.
In the first half of this year, Pliva reported total revenues of $652 million, of which bulk azithromycin sales accounted for $62 million and total royalties came in at $105 million. Analysts estimate that from 2006 Pliva will get considerably less than half of the current royalty revenues.
Pliva, which is Eastern Europe's largest drugmaker and operates in more than 30 countries, is aiming to offset this loss in business by building up its generic pharmaceutical business, and has a particular interest in breaking into the embryonic market for generic versions of biologic drugs.
The company recently announced its intention to get out of the branded pharmaceuticals business and sold off its recently-launched drug for overactive bladder, Sanctura (trospium), with the remainder of its proprietary product lines due to be divested over the coming months.
Last month, the company reported that it had signed an agreement with Canada-based Legacy Pharma for the sale of its proprietary central nervous system franchise, including various marketed drugs and PLD-180, a drug in Phase I trials for the treatment of amyotrophic lateral sclerosis.
Pliva aims to join the top 10 global generic drug producers in coming years, and reported a 12 per cent hike in generic sales in the first half of this year to $383 million. And if its ambition in biogenerics is fulfilled, it could get an early start in a market tipped to grow from practically zero at present in North America and Europe to $16.4 billion by 2011, according to consultancy firm Frost & Sullivan.
Pliva recently launched a generic version of the red blood cell stimulator erythropoietin (EPO) in its home market and has two strategic partnerships with Mayne Pharma and Barr Laboratories for biogenerics.
In February the company forged an alliance with Mayne to develop generic versions of the white blood cell stimulator granulocyte colony stimulating factor (G-CSF) and EPO in world markets, while the agreement with Barr covers the registration and marketing of a G-CSF product in the US and Canada.