Equity Analysis / Global

SEARL enters exclusive license agreement with Beximco Pharma for Remdesivir

  • Enters licensing and marketing agreement with Beximco Pharmaceuticals Bangladesh for Covid-19 treatment drug Remdisivir
  • SEARL will import Remdesivir in finished form, trading partnership is not as lucrative as a manufacturing agreement
  • We expect SEARL to price the drug similarly to Beximco in Bangladesh

In an exchange filing today, SEARL PA has announced that it has successfully entered into a licensing and marketing agreement with Beximco Pharmaceuticals Bangladesh for Remdesivir – a US FDA approved wide-spectrum antiviral drug used to treat advanced stage Covid-19 patients. This partnership will provide an immediate supply of the finished product at an affordable price and without much delay in due process. Initially SEARL plans to import Remdesivir in its finished form (ready-to-use) to meet the country’s urgent requirements. This is, however, subject to timely approval from the regulator (DRAP). SEARL expects the product to be made available on fast track to support product availability, (we think SEARL may look to manufacture the product later on). SEARL is also planning to donate a sizeable quantity to the government of Pakistan. 

Pricing in Bangladesh

Beximco will sell Remdesivir for about BDT6,000 (US$71) per vial to private clinics, but will give it for free to state-run hospitals treating Covid-19 patients. A critically ill Covid-19 patient will need at least 6-11 vials. This means it will cost BDT66,000 (US$782) worth of the drug for full treatment. We expect similar pricing by SEARL in Pakistan with the total treatment costs to cross cPKR100,000 per patient. 

Beximco and FEROZ cases are similar 

Both Beximco and Feroz Laboratories Ltd (FEROZ) entered non-exclusive license agreements with US based Gilead Sciences Inc. earlier last month for the manufacture and sale of Remdesivir. SEARL, however, plans to import the drug at final stage from Beximco. FEROZ and Beximco may sell the intravenous treatment to private clinics/hospitals and may also export its version if other governments request the drug. Although they do not have a license from Gilead to do so, WTO agreement provisions permit “least-developed” countries to grant a company the license to copy a patented medicine without the consent of the patent holder. As a result, Bangladesh/Pakistan are not required to avail pharmaceutical patents until 2033. 

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Equity Analysis / Pakistan

Pakistan's Ferozsons enters negotiations for Remdesivir production

  • FEROZ is in negotiations with Gilead Sciences to manufacture a Covid-19 treatment drug named Remdesivir
  • This is a non-exclusive license agreement where SEARL and Getz Pharma may also be potential candidates
  • If FEROZ successfully avails the license agreement, it is likely to fetch the top-end of premium valuations
Yusra Beg @
Intermarket Securities
12 May 2020

In an exchange filing yesterday, Ferozsons Laboratories Limited (FEROZ) notified that it has entered negotiations, via its 80% owned subsidiary BF Biosciences Limited (BFBL), to potentially reach a non-exclusive license agreement with US-based Gilead Sciences for the manufacture and sale of Remdesivir in Pakistan and 126 other countries. Remdesivir is a US FDA approved wide-spectrum antiviral drug used to treat advanced stage Covid-19 patients. 

However, the non-exclusivity of the agreement opens the field for several other local players and unlike FEROZ’s previous blockbuster drug Sovaldi – an innovator drug, for which it maintained a monopoly until patent expiry. Data from a trial by the National Institutes of Health (NIH) in the United States showed Remdesivir reduced hospitalisation stays by 31% compared to a placebo treatment, but it did not significantly improve survival.

We think Searle Company (SEARL) and Getz Pharma may also be candidates to obtain this license because of their existing presence in biosciences (Hep-C, HIV). Sanofi Pakistan (SAPL) may also potentially emerge with Regeneron Pharmaceuticals with other drugs later in the year, in our view.

Lead time to production is likely to be shorter than Sovaldi

Gilead’s patent on Remdesivir means it has the exclusive rights to produce it. But, under international trade rules, nations defined by the UN as least-developed countries (including Pakistan and Bangladesh) can ignore such patents and make drugs more affordable in their markets. 

Remdesivir is one of several repurposed drugs drawing cautious optimism for efficacy in Covid-19 treatment. These drugs are normally indicated for other diseases, where a shortened development timeline and reduced costs for existing compounds is particularly advantageous in a pandemic situation. The lead time to production is expected to be extremely short where Bangladesh’s largest drug makers, Beximco Pharmaceuticals, announced that it will start production in mid-May 2020 (under a similar agreement with Gilead). However, the exact timeline for FEROZ is yet to be determined as (i) negotiations with Gilead are still underway, (ii) sourcing of API remains and (iii) regulatory approval from DRAP have yet to be obtained. We expect it should be shorter than Sovaldi (7 months) due to the urgency of the situation.

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Equity Analysis / Pakistan

Pakistan: Ferozsons in talks with Gilead to produce Covid-19 drug Remdesivir

  • US Food and Drug Administration (FDA) recently authorised the use of Gilead's Remdesivir for treating coronavirus
  • Positive for Ferozsons (FEROZ PA), but limited by non-exclusivity, affordability and export potential
  • Since the license is not exclusive, Searle could be another potential local producer and competitor
Vahaj Ahmed @
Tellimer Research
11 May 2020

BF Biosciences limited, a subsidiary of Ferozsons Laboratories (FEROZ PA), is in talks with Gilead Sciences to manufacture and supply Remdesivir, a drug approved by the FDA to tread Covid-19 patients in critical condition, to Pakistan and 126 other countries. Although this is a positive development for Ferozsons given the rising Covid-19 cases in Pakistan, the non-exclusivity of the agreement, affordability and limited export potential could reduce the overall potential of this deal.

Covid-19 cases in Pakistan are rising sharply. There are 30,941 total confirmed cases in Pakistan, ranked 19th worldwide. The growth rate is quite sharp (10,000 cases in the past 7 days versus 7,026 in the preceding 7 days). Out of this, 111 cases (or 0.4%) are currently in critical condition. WHO has warned that total cases in Pakistan could rise to 200,000 by mid-July even as the lockdown has been relaxed significantly since Saturday.

Ferozsons (via subsidiary BF Biosciences) in negotiations with Gilead for Remdesivir production licence. Remdesivir is a broad-spectrum antiviral drug originally developed to treat Ebola by Gilead, which was approved by the FDA for emergency use on critically ill Covid-19 patients. 

With the licence non-exclusive, Searle could be another potential candidate. According to a notice from the company, Ferozsons is negotiating a non-exclusive licence agreement with Gilead. If there is enough demand for the drug, we think pharmaceutical company Searle could also step up as a producer with its production facilities in the south versus Ferozsons' plant in the north. The non-exclusivity clause of the licence already limits potential volume/profits for Ferozsons. Take the example of Sovaldi (a drug used to treat Hepatitis) – Ferozsons had an exclusive licence from Gilead to manufacture and sell the drug, which led to profits jumping by 137% yoy in 2016. However, the following year Ferozsons' net profit dropped by 82% yoy as other companies also received the license to produce the same drug. 

Export potential is limited. As per the notice, Ferozsons can export the drug to 126 countries, but we think that exports volume would not be significant as: (i) exports are currently very minimal (3% of total sales in FY 18-19); and (ii) Gilead is in talks with several manufacturers across North America, Europe and Asia for the production of this drug while Beximco Pharmaceuticals in Bangladesh is expected to start production of Remdesivir this month. 

Pricing is yet to be determined, but a regional peer indicates it could be as high as US$781 per patient. Beximco Pharamecutical in Bangladesh plans to price the drug between US$59-71 per vial, which means the total cost per patient could be anywhere between US$295 to US$781 depending on the severity of the case. This will be in addition to ICU/ventilator cost of atleast US$300 per day. The Institute for Clinical and Economic Review (ICER), which assesses the effectiveness of drugs to determine appropriate prices, put the cost of producing a 10-day course of Remdesivir at US$10, but suggested the price could rise to $4,500 based on benefits shown in clinical trials. The price range seems high for Pakistan where the per-capita income is only cUS$1,400. Having said that, we do expect the prices to be cheaper in South Asia compared to developed countries and could also be subsidised by the government, but affordability would still be a concern, nonetheless. 

Production timeline is still uncertain. There are several steps needed to start the production of Remdesivir which include: (i) the execution of a formal agreement with Gilead; (ii) procuring APIs; and (iii) securing local regulatory approvals from the Drug Regulatory Authority of Pakistan (DRAP). However, given that the FDA has approved the drug and the urgency of the current situation, we do not expect significant delays in approval by DRAP. 

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Flash Report / MENA

Proposed Saudi banking mega-merger could force competitors to react

  • NCB-Samba would be the third-largest bank in the MEA region and could act as a springboard for international expansion
  • Challenging environment (Covid-19, low oil prices and interest rates) and regional competition are likely key catalysts
  • Both banks have complementary strengths with scope for cost synergies, but announced terms favour Samba shareholders
Rahul Shah @
Tellimer Research
28 June 2020

One year after the SABB-Al Awwal merger was consummated, National Commercial Bank (also known as Al Ahli Bank) and Samba Financial Group have signalled their intention to merge. We think the motivations for such a transaction include the current difficult operating environment, and a desire to create a regional champion; other Saudi and regional banks may be forced to respond. However, as the aborted NCB-Riyad Bank alliance shows, the road ahead remains uncertain.

In our full report, available for Insights Pro subscribers, we highlight our thoughts regarding:

  • The transaction terms

  • The financial implications for both sets of shareholders

  • Why the merger is being proposed

  • What the new NCB-Samba would look like

  • Key challenges and concerns regarding the transaction

  • Which other combinations could follow

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