Pharma multinationals activating Indian arms

Multinational pharma companies are activating their 100 per cent subsidiary firms in India.

GlaxoSmithKline Plc will be using SB Asia ""its wholly-owned subsidiary in India "" to transfer patented technologies for manufacturing activities in the country. Pfizer is drawing up plans to launch the legacy brand of Parke Davis and Pharmacia (the two companies that are merged with Pfizer) in India.

These launches could either be through Pfizer India, Pfizer Inc's listed arm in the country, or through its two wholly owned entities "" Pfizer Pharmaceuticals India Pvt Ltd (the former Warner Lambert) and Pharmacia India Pvt Ltd.

Swiss drug maker Novartis AG is also exploring the areas in which it can optimally put to use its two wholly owned arms in India"" Novartis Consumer Health Pvt Ltd and Sandoz India Pvt Ltd.

A GlaxoSmithKline spokesperson said, "While GSK Pharmaceuticals India would launch the UK parent's drugs in India through the listed company here, the 100 per cent subsidiary of the parent, SB Asia, will be used if the parent has to transfer any of its patented technologies for the purpose of manufacturing and allied activities in the country."

The publicly listed GSK Pharmaceuticals India may have to pay a royalty in return to SB Asia.

Kewal Handa, director, finance, at Pfizer India, told Business Standard, "The new molecules from the parent portfolio will be launched in the Indian market either through the listed entity Pfizer India or through the parent company's 100 per cent arm. The decision will depend on which vehicle creates maximum value. For instance, if manufacturing activities are required, the launching vehicle could be the listed entity and if niche promotional activities and a dedicated field force are required it may be through the wholly-owned arm."

Most of these 100 per cent subsidiaries of pharma MNCs came into being through global takeovers and consolidation moves.

For instance, in the process of Pfizer's global consolidation with Pharmacia, Pharmacia India Pvt Ltd was retained as a fully-owned entity and was not merged with Pfizer India. Pharmacia Healthcare, the then listed entity, was merged with Pfizer India.

Similarly, post global acquisition of Aventis by Sanofi Synthelabo and despite the global merger subsequently, while Aventis is the listed entity, Sanofi continues to be the unlisted arm.

The government had decided to allow foreign pharmaceutical companies to set up wholly-owned subsidiaries in the mid-1990s.

That had kicked up a huge controversy, with critics arguing that Indian shareholders of the Indian arms of multinational drug companies would not benefit since the multinationals would launch new drugs through their subsidiaries and remit the profits to the parent company overseas.