Wall Street Journal - April 23, 2007
Nicholas Zamiska, nicholas.zamiska@wsj.com and James Hookway, james.hookway@awsj.com

Abbott is offering to sell the latest version of its AIDS drug Kaletra in Thailand at a discounted rate, according to Miles D. White, Abbott's chief executive. The move reverses Abbott's decision in February to withhold the new form of Kaletra, called Aluvia in some countries, from Thailand following a Thai government announcement it would allow sales of generic versions of the drug and other branded medicines to cut patients' costs.

"In this particular case, in the name of access for patients, we offered to resubmit Aluvia at our new price, which is lower than any generic, provided they wouldn't issue a compulsory license," Mr. White said. He said the initial decision was driven by "concern that compulsory licensing would be abused ever-more widely, using HIV as an excuse."

Jennifer Smoter, a spokeswoman for Abbott, said Thailand's health ministry has expressed interest in the offer, but a resolution hasn't been reached. Abbott's move doesn't affect its decision to withhold six other drugs from Thailand.

Abbott's turnabout could crimp growth of global drug makers, which rely on emerging markets to compensate for slowing growth in home markets.

Gustav Ando, an analyst for Global Insight, an economic-forecasting firm in Waltham, Mass., said, "If one country does it...any country can do it.... It's not going to stop there."

Abbott, of Abbott Park, Ill., in February, refused to sell the country seven of its newest drugs. The move appeared to backfire, prompting consumer boycotts in Thailand, bringing human-rights advocates out in support of Thailand's policy and provoking protests from some Abbott shareholders, who argued Abbott should sell its latest drugs in Thailand.

Thailand generated about $30 million a year in sales for Abbott, said a person familiar with the company's sales.

In backing down, Abbott is joining Merck & Co. and Sanofi-Aventis SA, which already have cut the prices of their AIDS and heart-disease drugs in the hope of dissuading Thailand from switching to less-expensive alternatives.

Thailand still could choose to import generic drugs to replace Abbott's, however, just as it is now using generic versions of Merck's AIDS drug Efavirenz, despite Merck's own move to lower prices.

Big drug companies have been pushing sales in emerging markets like Thailand, in part, because of a backlash against expensive brand-name drugs in the U.S. and other Western markets.

Merck expects revenue in emerging markets to double by 2010 to more than $2 billion a year. Abbott's international pharmaceutical sales totaled $1.68 billion in the first quarter of this year -- nearly as much as its $1.69 billion in U.S. sales. In 2006, Abbott's total sales in the U.S. dropped 7.5% to $11.5 billion, while the company's international revenue rose nearly 11% to $10.9 billion.

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