Share prices of Abbott India and Solvay Pharma rise 17%.
Share prices of both Abbott India and Solvay Pharma India zoomed over 17 per cent on the Bombay Stock Exchange (BSE) today, following news of US-based Abbott Laboratories’ acquisition of the Belgium-based Solvay Group’s pharma business for $6.6 billion.
Abbott India’s share prices closed today on the BSE at Rs 679, with a jump of 17.5 per cent over the previous day’s close of Rs 577.85, after touching a 52-week high of Rs 689.25. Solvay Pharma India’s share prices closed at Rs 959.15, 17.22 per cent higher than the previous day close of Rs 818.25, after touching a 52-week high of Rs 979.
Sources said the total public shareholding in Solvay Pharma India is about 31.15 per cent, one of the largest among multinational companies operating in India. According to the data up to June 30, the promoter group led by Solvay Healthcare (49.44 per cent) and British Colloids (19.41 per cent) together have 68.85 per cent stake in the company. Solvay Pharma India was formed in 2002 as a consequence of the de-merger of the pharma business of Duphar-Interfran. In the case of Abbott India, Abbott Capital India holds 68.94 per cent and the rest is public shareholding.
Analysts said after the merger, the combined entity will become one of the top five multinational drug companies operating in India, after Ranbaxy Laboratories, Glaxosmithkline, Sanofi-Aventis and the Pfizer-Wyeth combine, with a combined turnover of over Rs 900 crore, based on 2008 sales figures. There are 13 multinational drug companies currently operating in the Indian market, with listed entities.
While Abbott India’ sales were close to Rs 700 crore in 2008, Gurgaon-based Solvay India had sales of about Rs 200 crore.
“The product portfolio of these two companies are not overlapping in the Indian market and will have synergistic benefits here after their merger. Globally, Abbott is facing new drug pipeline issues and the acquisition will boost its pipeline,” said Ranjit Kapadia, vice president (institutional research) at HDFC Securities.
Mumbai-based Abbott, which has a network of 18 distribution points catering to 11,000 stockists and 70,000 retailers, has manufacturing facilities and research and development centres in Goa. Solvay Pharma India follows an outsourcing model and has engaged eight contract manufacturers in different parts of India, besides selling products from its global portfolio, said sources.
Abbott employs over 1,000 people in India and has strength in primary care therapeutic areas like gastro-enterology, pain management, neuroscience, neonatal care, metabolic disorders and hospital care. Some of its popular brands in the local market include metabolic disorder drug Digene, pain reliever Brufen, and Cremaffin (for relief from constipation). At present, seven of its products are among the top 300 brands in the domestic market.
Solvay Pharma India employs about 450 people and has strength in women’s health, gastro-enterology, mental health and influenza vaccines.
