Pfizer Inc. reached a licensing agreement that will allow generic-drug manufacturers to produce inexpensive versions of its Covid-19 pill for 95 low- and middle-income countries, following a similar move by Merck & Co.

In a statement on Tuesday, Pfizer said it has signed an agreement with the United Nations-backed Medicines Patent Pool to license the experimental pill, once it is authorized by regulators, to generic companies that can supply it to countries that account for roughly 53% of the world population. The shares fell 1% in pre-market U.S. trading.

Pfizer won't receive royalties from sales in low-income countries, and won't get royalties from sales to middle-income countries covered by the pact as long as Covid-19 is classified as a public-health emergency, according to the statement.

The widely awaited deal could help bolster access to a potent new virus-fighting tool. Unlike the exotic mRNA technology in Pfizer's Covid-19 shot, the chemical techniques used to manufacture pills are mature and long-established, and numerous generic companies can cheaply produce them. Pfizer has been under considerable pressure to license the technology ever since it announced promising clinical-trial results earlier this month.

Highly effective pills that can be taken at the first sign of infection are seen as crucial for getting the pandemic under control. Pfizer's drug reduced hospitalizations and deaths by 89% in a large study of high-risk patients, the company said this month. It is applying for emergency authorization in the U.S. and has said it plans to seek authorizations in other countries soon.

"These are potentially life-saving drugs," Charles Gore, executive director of the Medicines Patent Pool, said in an interview. "The sooner we can get it out there, the more people who won't need to go to the hospital and won't die."

In addition to lower- and lower-middle income countries, the pact includes some upper-middle income countries in sub-Saharan Africa, as well as countries that transitioned from lower-middle to upper-middle income status in the past five years, Pfizer and the Medicines Patent Pool said.

Merck also has a promising experimental Covid pill called molnupiravir. The U.S. pharmaceutical giant reached a licensing deal with the Medicines Patent Pool last month that covers over 100 low- and middle-income countries. Merck and partner Ridgeback Biotherapeutics LP have sought emergency authorization for their pill in the U.S.; advisers to the Food and Drug Administration are set to consider the application at a hearing this month.

Discussions with Pfizer moved rapidly, Gore said, and the pact could allow supplies to get to countries within months.

"As with molnupiravir, we're trying to make this as fast as humanly possible," Gore said. The Merck and Pfizer agreements cover about the same number of people, he said.

The patent pool is also in licensing discussions over a Covid vaccine that have intensified recently, according to Gore. He declined to elaborate or identify the company but said it's not a developer of an mRNA shot.

Robert Langreth and James Paton report for Bloomberg.

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