Dr. Reddy’s Laboratories, one of India’s leading pharma companies, is reportedly interested in acquiring a majority stake in Novartis India, the listed subsidiary of Swiss multinational Novartis AG. This comes after Novartis AG announced a strategic review of its 70.68% shareholding in Novartis India on February 16, 2024.
Why Dr. Reddy’s wants Novartis India
Dr. Reddy’s is said to be eyeing Novartis India’s domestic-focused portfolio, which includes well-known brands such as Voveran (painkiller), Calcium Sandoz (calcium supplement) and Methergine (postpartum bleeding). These brands have a strong market presence and loyal customer base in India, and could complement Dr. Reddy’s existing offerings in the chronic and acute segments.
Dr. Reddy’s already has an exclusive sales and distribution agreement with Novartis India for these brands since February 2022, when Novartis streamlined its operations in India by transferring the rights to Dr. Reddy’s. This agreement could give Dr. Reddy’s an edge over other potential bidders for Novartis India, as it has access to the sales data and distribution network of these brands.
Dr. Reddy’s could also benefit from the synergies and cost savings that could arise from acquiring Novartis India, such as reducing duplication of resources, leveraging economies of scale and enhancing operational efficiency.
What Novartis India offers
Novartis India is a separate entity from Novartis Healthcare Pvt Ltd, the wholly owned subsidiary of Novartis group in India. Novartis India focuses on the generics and OTC segments, while Novartis Healthcare Pvt Ltd handles the innovative and specialty medicines.
Novartis India has a revenue of Rs 378.7 crore in FY24 and a market capitalisation of Rs 2,556.61 crore as of February 17, 2024. It employs more than 8,100 associates in India across various functions such as manufacturing, research and development, sales and marketing.
Novartis India has a strong portfolio of products across therapeutic areas such as cardiovascular, dermatology, respiratory, gastroenterology and pain management. It also has a robust pipeline of new products that are expected to be launched in the near future.
What are the challenges and opportunities
The acquisition of Novartis India by Dr. Reddy’s is not a done deal yet. There could be regulatory hurdles, valuation issues and competitive bids from other pharma players who may be interested in Novartis India’s assets.
However, if the deal goes through, it could create a win-win situation for both parties. Dr. Reddy’s could strengthen its position in the Indian pharma market by adding some of the most trusted and popular brands to its portfolio. Novartis AG could exit a non-core business and focus on its core areas of innovation and specialty medicines.
The deal could also have implications for the Indian pharma industry as a whole, as it could trigger more consolidation and M&A activity in the sector, which is facing challenges such as price erosion, regulatory scrutiny and competition from global players.
Recent Blog : Sebi Confirms Refund to 21 Lakh PACL Investors