* To use its brand to sell Torrent Pharma generic medicines
* Will have 18 products in nine markets initially
* Financial terms not disclosed
* Torrent shares up 3 pct, Astra off 1.2 pct (Adds Fitch comment on margin pressure, latest shares)
By Ben Hirschler
LONDON, March 11 (Reuters) - AstraZeneca AZN.L is boosting its presence in emerging markets through its first branded generics supply deal, with India's Torrent Pharmaceuticals TORP.BO, mirroring similar tie-ups by other Big Pharma groups.
The Anglo-Swedish company said on Thursday Torrent would initially supply it with 18 generic medicines for which the latter already has licences in a range of countries.
AstraZeneca -- which will host an investor day on March 16 to highlight its plans for emerging markets -- intends to use its own brand to sell these products in lower-income markets where it already has a strong commercial footprint.
Cheap off-patent medicines sold in high volumes in emerging markets under a multinational brand name are a growing target for major drugmakers. But some investors and analysts worry about the impact on margins of this move down the value chain.
“Such initiatives among large pharma companies reflect a strategic attempt to position themselves in high growth regions, although this puts pressure on operating profitability,” said Britta Holt, European healthcare director at Fitch Ratings.
And as growth in demand for prescription pharmaceuticals slows in the West, where many blockbuster drugs are losing patent protection, the appeal is set to increase.
Emerging markets are forecast to contribute around 70 percent of pharmaceutical industry growth in the next five years and branded generics represent approximately 50 percent by value in these markets, AstraZeneca said.
The AstraZeneca-Torrent deal only covers 18 products in nine countries to start with, but this is expected to grow over time.
“In markets where consumers and physicians have a strong preference for trusted brands, we believe AstraZeneca’s long-standing reputation for quality is a sustainable competitive advantage,” said Tony Zook, who heads the company’s global commercial organisation.
Financial terms were not disclosed and a company spokesman also declined to name the medicines involved or the countries where they will be sold, citing competitive reasons.
Shares in Torrent ended 3 percent higher at 490.10 rupees, after hitting an all-time high of 501.70. AstraZeneca stock was off 1.2 percent by 1415 GMT, underperforming a 0.3 percent fall in the European sector .SXDP.
SLOW TO JOIN TREND
For AstraZeneca, the Torrent alliance is the first of its kind, although the London-based group is already selling some of its own originated medicines in emerging markets as branded generics.
Its cholesterol blockbuster Crestor, for example, is priced to compete with a range of cheap generic copies in the Indian market, where the drug does not enjoy patent protection.
Other major drugmakers have been more proactive than AstraZeneca, which until now has been cautious about an industry-wide drive towards diversification.
British rival GlaxoSmithKline GSK.L has struck similar branded generic supply deals with India's Dr Reddy's REDY.BO and Aspen APNJ.J of South Africa, while Sanofi-Aventis SASY.PA has bought a number of emerging market businesses, such as Brazil's Medley.
Pfizer PFE.N, the world's biggest drugmaker, has also been looking actively for acquisitions to bolster its emerging markets presence.
According to Citigroup analysts, AstraZeneca lags its peers in terms of the percentage of its revenue which is generated from emerging markets.
Novartis NOVN.VX, Sanofi-Aventis and Bayer BAYGn.DE lead the way with around 25 percent of group sales from emerging markets, while AstraZeneca's emerging market revenue was $4.35 billion in 2009, or 13 percent of the group total. (Editing by Dan Lalor and David Holmes)
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