AstraZeneca has entered into an agreement with Pfizer Inc. for the over-the-counter (OTC) rights for Nexium (esomeprazole magnesium), a leading prescription drug currently approved to treat the symptoms of gastroesophageal reflux disease (GERD).

Under the terms of the agreement, Pfizer will acquire the exclusive global rights to market Nexium for the approved over-the-counter indications in the United States, Europe and the rest of the world. Under the agreement, Pfizer will make an upfront payment of $250 million to AstraZeneca and AstraZeneca is eligible to receive milestone and royalty payments based on product launches and sales.

Based on the anticipated timing of the close of the transaction, AstraZeneca will recognise the upfront of $250 million as other income in 2012. This will increase core earnings per share for 2012 by approximately $0.16. As a consequence the Core EPS target for 2012 is increased to the range $6.00 to $6.30.

Nexium, a Proton Pump Inhibitor, was launched by AstraZeneca in Europe in 2000 and the US in 2001. AstraZeneca will continue to manufacture and market the prescription product, as well as supply Pfizer with the OTC product. A Marketing Authorisation Application for OTC Nexium in a 20mg tablet form was filed with the European Medicines Agency in June 2012. A New Drug Application filing for OTC Nexium in the US in 20 mg capsules is targeted for the first half of 2013 and if approved Pfizer anticipates commercialising this product in the US beginning in 2014 with launches in other markets to follow.

In addition, both companies are exploring the potential for a strategic partnership that would include similar agreements for other AstraZeneca prescription brands for which an OTC version might be appropriate. The companies have signed a right of first refusal regarding OTC rights for Rhinocort Aqua, a pump spray containing the glucocorticosteroid budesonide, with a local anti-inflammatory effect for the treatment of non-infectious rhinitis (such as hay fever and house dust mite allergy).

Tony Zook, executive vice president of AstraZeneca’s Global Commercial Organisation said: “AstraZeneca has long been a leader in the gastrointestinal sector, and we believe that an OTC version of Nexium will complement this globally successful prescription medicine and help bring relief to more patients around the world. We’re pleased to work with Pfizer Consumer Healthcare and believe their expertise in the sales and marketing of consumer health products makes them the optimal partner to commercialise OTC Nexium globally. This agreement will help AstraZeneca realise the substantial, long-term value of this brand and potentially other brands in our portfolio.”

Pfizer Consumer Healthcare president Paul Sturman said: “Nexium is one of the most recognized and respected products in its class with tremendous brand equity and loyalty. We are proud to be AstraZeneca’s partner of choice for Nexium OTC. By working with AstraZeneca to potentially offer an over-the-counter version of Nexium, a brand people know and trust, we are taking another crucial step to empower consumers by providing convenient access to important health care products.”

“Pfizer is continuing to enhance the value of our Consumer Healthcare business,” stated Ian Read, Pfizer’s chairman and chief executive officer. “Through its strong connection to our core biopharmaceutical business and to emerging markets and pharmacy customers worldwide, Pfizer Consumer Healthcare will have the opportunity to help more consumers better manage their health, while extending the value of certain important pharmaceutical brands.”