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Pharmaceutical majors Cipla and Pune-based unlisted Serum Institute said these were planning a marketing tie-up to sell vaccines in select markets abroad. The arrangement added to speculation the companies were planning a merger.
Cyrus S Poonawalla, owner of Serum Institute, admitted in an interview to CNBC-TV18 on Friday the companies had held early merger talks.
"The companies are too big for a merger," said a source on the Cipla board. But bankers said a merger made sense.
The Hamieds of Cipla and the Poonawallas of Serum have known each other for 40 years, and with the next generation entering business in the two companies, they were exploring ways to work on each other's strengths, the source said.
Serum is the world's largest producer of vaccines but lacks distribution abroad. In the last few years, Cipla has strengthened its distribution in Africa and is planning to raise foreign revenue to 80 per cent of the total.
Cipla will market Serum’s products in Africa and Europe. Poonawalla holds a stake in Panacea Biotec, the world’s largest maker of polio vaccines.
Cipla is focusing on producing anti-human immunodeficiency virus drugs at a fraction of the cost of what multinationals incur. It also acquired 100 per cent of South Africa’s Cipla Medpro for $512 million in 2013, 51 per cent of a Yemeni pharmaceuticals company last July for $21 million, and 60 per cent of a drug distributor in Sri Lanka for $14 million.
Yusuf Hamied, promoter of Cipla, and Poonawalla are known for their pro-poor stance. Cipla has fought multinationals over patents and saved millions of lives with its less than $1 a day AIDS medicines. Serum Institute supplies vaccines used to immunise two of three children worldwide.
Cipla shares closed 0.49 per cent down at Rs 658 on the Bombay Stock Exchange on Friday.
Poonawalla was recently in news when the promoters made a bid to acquire Sahara’s Grosvenor House in London for 550 million pounds. But the offer was never accepted by Sahara group.
