US based pharmaceuticals major Pfizer Inc Thursday announced it has entered a partnership with Brazil’s foremost generics industry firm for the manufacture of generic medicines. In its announcement, Pfizer said it had agreed on a partnership with Laboratorio Teuto Brasileiro S.A, Brazil’s leading firm in the country’s generics industry, to develop and commercialize generic medicines.

Under the terms of the partnership, Pfizer will acquire a 40 per cent stake in the Brazilian firm and the two firms will as well go into a number of commercial agreements. Pfizer expects the partnership to enhance its placement in Brazil, one of the American firm’s crucial emerging markets, through the provision of access to Teuto Laboratorio’s broad portfolio of around 250 products in over 400 presentations.

In addition, Pfizer expects that via this partnership, it will be able to gain access to a considerable number of distribution networks in rural and suburban areas in Brazil, as well as the chance to register and commercialize Teuto Laboratorio’s products in various markets outside Brazil. Other than that, Pfizer will have two representatives on Teuto's board of directors.

The agreement will see Pfizer make an upfront payment of about US$240 million, and Teuto will be eligible to receive a performance-based milestone payment. Pfizer has an option to acquire the remaining 60 percent of Teuto's shares beginning in 2014. Teuto's shareholders have an option to sell their 60 percent stake to Pfizer beginning in 2015. The terms, in other words, give the deal both a call option by Pfizer and a put option by Teuto’s shareholders.

However, for Pfizer, the deal gives it the chance to register and commercialize Teuto products in the country and in other markets overseas under its own brands, inclusive of branded and unbranded generic medicines. The medicines cover a broad range of therapeutic areas, such as pain and inflammation, cardiovascular, anti-infectives, central nervous system and respiratory, among others.

On its part however, the Brazilian firm will gain access to select Pfizer products for distribution across its extensive distribution network and have the right to commercialize them under Teuto's own brand in Brazil. The transaction is subject to customary closing conditions and is expected to close by the end of fourth-quarter 2010.  Pfizer's financial advisor for the transaction was Goldman Sachs Group while Banco BTG Pactual served as Teuto's financial advisor.

21 Oct 2010.