Online Exclusive: Courting Controversy - Part II

Last September, AstraZeneca found itself in the midst of a public relations maelstrom after David Smith, the company's executive vice president of operations, remarked to The London Times that the pharmaceutical giant planned to confer the manufacture of its active pharmaceutical ingredients (APIs) as well as "more sophisticated manufacturing and logistics activities" to contract manufacturers in China and India. His quotes were partially quelled by an AZ spokesperson who said the company was merely "exploring" the possibility that "operations will continue to source activities in-house that are critical to keeping connected with the patient and essential to ensuring patient safety supply and manufacturing."

In the seven months that have passed, it would seem that AZ has indeed been considering those API outsourcing options, albeit more quietly and certainly more privately. The matter that most recently brought the company's long-term intentions to light was its much publicized patent infringement litigation settlement with Ranbaxy Laboratories Ltd. over the drug Nexium.

The terms of the settlement entitle Ranbaxy, which sparked the litigation after submitting an Abbreviated New Drug Application to the FDA for a generic version of Nexium, to begin selling a generic version of that drug under a license from AstraZeneca on May 27, 2014 (the date on which AZ's patents protecting Nexium expire).

More notably though, the two companies also entered into agreements under which Ranbaxy will formulate a portion of AZ's U.S. supply of Nexium from May 2010, including provisions for the manufacture of esomeprazole magnes,ium Nexium's API, beginning in May 2009.