Generic manufacturer Mylan has agreed a $17.5 million deal with Pfizer for the exclusive rights to develop, manufacture and commercialise a portfolio of respiratory products.

As part of the deal, Mylan will have licensing rights to Pfizer’s generic equivalent to GSK’s Advair and Seretide.

Heather Bresch, Mylan President, says the agreement offers a “significant opportunity for our generics business”.

The agreement will also see Mylan retaining staff at Pfizer’s respiratory inhalation development team at Discovery Park in Sandwich, Kent. Other former Pfizer staff will be located in Cambridge.

Under the terms of the agreement Mylan will have rights to Pfizer’s dry powder inhaler (DPI) technology platform, as well as the opportunity to negotiate on existing compounds during different stages of their development in the Pharma giant’s pipeline.

Mylan will have to pay the costs for any remaining development and commercialisation for the transferred products. Additional payments will also be made once the deal is completed, depending on the regulatory and commercial success of the portfolio.

Advair Diskus and Seretide Diskus are inhaled fixed-dose combinations of Fluticasone Propionate and Salmeterol which are delivered via a DPI and used to treat asthma and COPD.

On completion of the deal, Mylan with gain the exclusive commercialisation rights for Seretide in the US, Canada, Australia and New Zealand, as well as in the EU and European Free Trade Association countries. The two companies will have the co-promotion rights to the product in the rest of the world.

GSK saw a reduction in operating profit, group turnover and sales in Q2 after the company was hit by huge losses to the controversial Avandia diabetes franchise.

Sales of the drug slumped by 82% to £26 million following its suspension in Europe and restrictions in the US resulting in a 7% fall in operating profit and a 2% drop in group turnover.

Despite the losses Chief Executive Andrew Witty says the “outlook is very positive” for GSK and it is “well on track in the delivery of our strategy”.

The company’s operating profit, before major restructuring, fell to £2.27 billon, while group turnover reached £6.72bn. Pharmaceutical and vaccine sales were also down slightly by 3% to £5.44bn as a number of other products saw a reduction in revenue.

Valtrex (valaciclovir) saw sales fall by almost half (48%) to £86 million following generic competition, with vaccine sales also down 15% to £787 million.

However, sales were up 2% for Advair/Seretide (salmeterol and fluticasone) to £1.27 billion, by nearly a quarter (24%) for Avodart (dutasteride) to £188m, and by 14% for Lovaza (omega-3-acid ethyl esters) to £145 million.

Andrew Witty said that despite the losses on Avandia and Valtrex pharma sales benefited by performances in emerging markets and Japan. He said that the 1% decline in turnover in Europe was a good performance “given price reductions enacted by governments” which impacted sales growth by 6%.

He added that GSK’s restructuring programme is “near competition” and that savings delivery was approximately £300 higher than originally forecast. Going forward he said the company would press for further savings through improvements in support functions, supply chain and procurement efficiency.