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Executive Summary

PHARMACEUTICAL FIRM "EUROALLIANCE" WILL IN-LICENSE COMPOUNDS from smaller American and Japanese drug firms "looking to optimize the development and launch of their new products throughout Europe, by working with strong local companies in each market," according to a Nov. 8 press release from the founding firms. Three privately-held pharmaceutical entities with combined annual revenues of over $ 500 mil. have initially agreed to set up EuroAlliance: Laboratoire L. Lafon, in France; Merckle, in West Germany; and the Alfa-Schiapparelli-Wasserman (ASW) Group, which is comprised of seven Italian companies. In addition to in-licensing compounds for marketing, companies participating in the EuroAlliance will be able to jointly fund and develop one another's compounds for specific European countries. Membership will be extended to other privately-held European drug companies but limited to one firm per country. The companies' areas of research are complementary. Lafon's research focuses on the development of cardiovascular, gastrointestinal, central nervous system, and immunological products. Merckle specializes in locomotory systems, lipid metabolism, respiratory and digestive tract drugs, while ASW's concentration is in cardiovascular diseases, artherosclerosis prevention and treatment, and antibiotics. Merckle's generic subsidiary Ratiopharm, one of the largest generic drug firms in Germany, had 1988 sales of over $ 175 mil., while the parent company annualized at $ 40 mil. Lafon earned $ 90 mil. in 1988, and ASW estimates its 1989 sales will approach $ 200 mil. Lafon and Merckle have sales forces of 100 reps and 125 reps, respectively. * None of the three companies currently has in-licensing agreements. However, Lafon out-licenses its $ 125 mil. per year cardiovascular product buflomedil to Abbott, which markets the product internationally. And ASW is involved in a 51% joint-venture with G. D. Searle to market branded generics and eventually distribute products developed by ASW in the U.S. ("The Pink Sheet" Aug. 29, 1988, "In Brief"). The cooperative arrangement creates a framework for participation in the unified European market of 1992 by some of the smaller, non-multinational drug companies, while at the same time, allowing for their autonomy. In the three countries where the EuroAlliance will initially operate, total annual pharmaceutical sales are estimated at about $ 30 bil. "A major attraction of this agreement is the simultaneous clinical development in each of the key markets of Europe by partner companies, after preclinical development by the originator company," the release explains. "In this way, expenses can be jointly shared amongst the partners and the development process can be optimized. Regulatory filings will then be handled by the local partner or through an [European Economic Community] EEC application, whichever is preferable."

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