Zidovudine will boost Glaxo

Inclusion of bulk drug zidovudine, Glaxo's patented anti-AIDS drug, in the life-saving drugs category should translate into substantial benefits for Glaxo India Ltd. Zidovudine imports now attract zero customs duty, against the concessional levy of 20 per cent earlier.

The duty cut is also expected to intensify price competition between the British multinational and the Rs 541-crore Cipla, the other major player in the anti-AIDS formulation segment. Cipla has recently slashed the price of its zidovudine-based formulation by 25 per cent to Rs 15 per tablet from Rs 20 per tablet. Thus, the price differential between its brand and Glaxo's Retrovir is over 200 per cent. The pre-budget price of Retrovir was Rs 50 per tablet.

Retrovir commands a market share of around 12 per cent, and it is growing 542 per cent (due to the brand's low base), according to ORG's estimates for December 1998. While analysts expect Glaxo India to pass on the benefit of duty reduction to AIDS patients, the possible price cuts, they say, are unlikely to match Cipla's price levels, mainly because of the "basic research efforts' that have gone into producing the drug. Even if Glaxo reduces the price of Retrovir to around Rs 35 for Retrovir, it will not make a dent in Cipla's position.

While the Glaxo management has not announced its pricing strategy, it is felt that the company may prefer to import the product rather than make it in India. For local manufacture would attract regular excise levies while imports are now duty-free.

The Wellcome Group (now Glaxo-Wellcome) holds the original patent for zidovudine.