AstraZeneca has entered a long-term deal with Torrent Pharmaceuticals to provide them with generic drug products. AstraZeneca would initially purchase from Torrent the licences and market authorisations for 18 products in nine countries. Further products and countries may be added.

Costs to manufacture generic drugs are about 75 percent less than costs in mature markets, making it a highly desirable place to make these types of deals. Torrent already has licenses to operate in a number of countries. AstraZeneca will take those generic medicines and re-brand it under their specific labels, with a large number of them being in emerging markets.

With patent protection running out on some of AstraZeneca's larger drugs, this is probably a move to generate revenue and profits as this happens by 2014. Three of the best-selling patented drugs will be included in the loss of patent protection: Crestor for lowering cholesterol, Seroquel for cancer and Nexium for ulcers. That leaves a huge hole to fill, the reason for making this move at this time.

Taking existing generic drugs and branding them is a very cost-effective way to do business and generate revenue and solid profits, while a company works on unique products of its own, while still not needing to count on major breakthroughs to survive.

The $32.8-billion AstraZeneca, second largest drug company in Britain, becomes the third big multinational innovator in recent times to enter generic supply deals with an Indian company.

The Rs 1,184-crore turnover Torrent has a similar supply agreement with Denmark- based Novo Nordisk to supply insulin products. The company, which markets its products in over 50 countries, has manufacturing units at Chhatral in Gujarat and Baddi in Himachal Pradesh.