Penicillin: Dr. Reddy's Buys Glaxo's U.S. Business

GlaxoSmithKline is getting out of the oral penicillin business in the United States, selling a factory and two key brands to India's Dr. Reddy's Laboratories.

Financial terms of the deal, which is expected to close in the first half of 2011, were not disclosed in a joint statement from the two drugmakers on Tuesday.

Dr. Reddy's will take over the British company's U.S. penicillin manufacturing site in Bristol, Tenn., and get the rights for the penicillin medicines Augmentin and Amoxil.

Both drugs are now subject to generic competition and consequently generate only minor sales for Glaxo.

Glaxo said the disposal would allow it to focus on its newer portfolio of differentiated products, while the deal gives Dr. Reddy's - a leading generics supplier - an entry into the U.S. penicillin-containing antibacterial market.

"This acquisition is in line with our strategy to significantly scale up our generics business in North America," said Abhijit Mukherjee, Dr. Reddy's head of global generics.

Glaxo will retain the existing rights for Augmentin and Amoxil outside the United States.