In The News
25 May 2014

GSK India to benefit from global business swap deal with Novartis

MUMBAI: Glaxo Smith Kline's India operations will benefit from the global business swap deal agreed to by its British parent and Swiss giant Novartis BSE 0.76 % last month, a top executive has told ET. Glaxo will get Novartis' vaccine portfolio, including anti-rabies products such as Rabipur, while transferring its smaller oncology business. The two companies agreed on this swap last month. GSK India's oncology sales were around Rs50-55 crore.

Hasit Joshipura, MD of GSK, said Novartis vaccine products will add muscle to Glaxo's efforts to strengthen its presence in the Rs1,600-crore vaccine market. India has one of the largest numbers of births per year in the world, Joshipura said. "Typically as education and income increase, the obviously one thing Indians will do is spend on their children.

It is probably the most exciting vaccine market in world." He estimated that Rabipur alone would be worth about Rs110 crore, according to IMS while the size of the oncology business is estimated at about Rs50 crore. Glaxo, one of the oldest foreign pharma companies, in the country has recently been hit by price cuts in many of its products. Slowing growth and delays in clinical trials have hampered investment and frustrated many multinational companies.

But GSK has gone ahead and announced a new plant in India for about Rs800 crore, its first investment outside the headquarters in the UK in 20 years. Joshipura says the site has not yet been finalised though the press statement issued by the company in November last year indicated that the lead site is Bangalore. Joshipura said Bangalore is not a done deal though it is the intent. He hinted that Gujarat may be a suitable candidate. "Location is not guaranteed yet. Bangalore is the intended location. Pharma plant needs talented labour, Gujarat has a lot of pharma companies manufacturing," he added.

The sale of the oncology business did stump some GSK analysts and industry experts as cancer drugs are perceived to be the future of drug market. Joshipura says it was driven by pragmatism. "Globally, we are the 14th-largest oncology company, so even with the entire visible pipeline that we have, we would have been 10th or something like that. So we have to play to our strengths."

GSK is now expanding is its vaccine and respiratory portfolio in India. The private vaccine business in India is estimated to be close to
Rs1,600 crore and is growing at around 11%. However, GSK is betting on rising birth rates and income level in the country to make its mark.

What is intriguing is the company's optimism towards the Indian market. As global pharma companies lash Indian markets for slow approvals, regulatory confusions and overall slowdown, GSK assures there is nothing to worry. "We have built a model which is appropriate to this market. We moved manufacturing many years ago to India, then we have pricing which is India-specific, we got lucky in the early period where we have products specific for India's disease profile," said Joshipura.

Source: Economic Times