The Grapevine

Manufacturing Deal Wins China Cheap Supply Of GSK's New HIV Drug

A British Airways airplane flies past a signage for pharmaceutical giant GlaxoSmithKline (GSK) in London April 22, 2014. REUTERS/Luke MacGregor

LONDON (Reuters) - China will receive cut-price supplies of GlaxoSmithKline's new HIV drug Tivicay, following a deal for Shanghai-based Desano Pharmaceuticals to become an additional manufacturer of the medicine's active ingredient.

The collaboration between GSK's HIV unit ViiV Healthcare and Desano marks an improvement in the business climate for the British drugmaker, which was fined a record 3 billion yuan ($484 million) in September for bribing Chinese doctors.

At the time, GSK promised to boost access to its medicines in the country by expanding local production and adopting flexible pricing. However, a ViiV spokesman said the negotiations with Desano predated this commitment.

Under the agreement announced by ViiV on Thursday, Desano will manufacture the active pharmaceutical ingredient for Tivicay, or dolutegravir, to feed into the GSK/ViiV supply chain for onward sale in China and other developing countries.

ViiV said the move would allow it to offer a "competitive" supply of finished product, without specifying the scale of price discount. The spokesman said the drug's price in China would be in line with that charged in poor countries.

(Reporting by Ben Hirschler; Editing by Mark Potter)