GlaxoSmithKline sells US penicillin facility and products to India's Dr Reddy's; GSK favored in Paxil trial

UK pharmaceutical giant GlaxoSmithKline (LSE: GSK) and Dr Reddy’s Laboratories (NYSE: RDY) have signed an agreement relating to GSK’s US oral penicillin facility and product portfolio. Financial terms and conditions of the transaction, which is expected to close in the first half of next year, were not disclosed.

Under the accord, GSK will transfer ownership of its penicillin manufacturing site in Bristol, Tennessee, and rights for the Augmentin (amoxicillin clavulanate) and Amoxil (amoxicillin) brands in the USA to the Indian drugmaker. GSK will retain the existing rights for these brands outside the USA. Augmentin brought in global sales of £153 million ($244 million) in the third quarter of 2010, but are negligible in the USA, where these were just £1 million in that period.

Abhijit Mukherjee, president, global generics business, at Dr Reddy's Laboratories, said “it allows us to enter the United States penicillin-containing antibacterial market segment and serve the needs of our customers and patients through manufacturing capabilities that did not previously exist within Dr Reddy’s. This acquisition is in line with our strategy to significantly scale up our generics business in North America while providing an opportunity to explore additional synergy with our other businesses.”