AstraZeneca raised its full-year earnings expectations after signing a deal to allow Pfizer the future rights to market an over-the-counter version of its top-selling heartburn medication.
The Anglo-Swedish pharmaceutical group on Tuesday said its US rival had agreed to pay $250m to acquire the exclusive global rights to sell a non-prescription form of Nexium, a heartburn medication popularly marketed in the US as “the purple pill”.
AstraZeneca will also receive milestone and royalty payments from sales of Nexium, which was one of the FTSE 100 drugmaker’s top prescription drugs in 2011, generating some $4.4bn in sales, down from almost $5bn the previous year.
The UK’s second-largest pharmaceutical group by sales said the deal would increase its 2012 core earnings per share by $0.16, which had encouraged it to boost its target to $6-$6.30.
AstraZeneca said that it would maintain the rights to the prescription version of the drug, and added that the over-the-counter version had yet to be approved by US regulators.
If all goes to plan, the non-prescription version could go on sale in the US as soon as 2014, and over-the-counter deals have been suggested for other AstraZeneca treatments such as anti-allergy medications.
“This agreement will help AstraZeneca realise the substantial, long-term value of this brand and potentially other brands in our portfolio,” said Tony Zook of AstraZeneca.
Nexium is poised to lose its US exclusivity patent in May 2014, and has already come under pressure from unauthorised generics.
In the first half of 2012, AstraZeneca reported $1.9bn in sales of Nexium – down 15 per cent from $2.4bn in the same period a year ago.
The deal provided a boost to AstraZeneca’s shares – up 0.8 per cent to £30.16 in early London trading – which had suffered since late last year following developmental drug failures and a looming end to many of its exclusivity patents.
Last week the group axed second stage trials of CytoFab, an experimental treatment for sepsis that it had hoped would become a blockbuster with potential annual sales of £1.2bn.
But trials found the drug neither significantly reduced the need for patients to use ventilators nor cut the rate of mortality.
In December, AstraZeneca took a $382m writedown against the failure of two late-stage medicines, and last month reported a 15 per cent fall in first-half revenues as the loss of exclusivity patents on some of its most lucrative drugs ran out.
AstraZeneca has a more substantial patent cliff than some of its rivals, with about half of its $33bn in annual revenue expected to disappear by 2016.
The deal will bolster Pfizer’s stable of over-the-counter products, which include Advil, the pain relief medication, multivitamin brand Centrum and ChapStick lip balm.