Knoll Pharmaceuticals To Hive Off Otc Brands

Knoll Pharmaceuticals Ltd, the Indian subsidiary of Knoll AG of Germany, is planning to exit from the over-the-counter (OTC) segment and focus on its formulations business. The company is looking for buyers for its OTC brands, which include well-known names like Strepsils, Burnol, Aciguard and Coldarin.

Along with these brands, Knolls wholly-owned subsidiary, Beem Healthcare, will also be hived off. Beem Healthcare was set up with a dedicated field force to market OTC products.

The pharmaceuticals majors in the race for Knolls OTC products include Smithkline Beecham, Parke Davis and Nicholas Piramal. Knoll Pharma expects to receive around Rs 70 crore for the deal, which is to be finalised later this month.

 

When contacted, Knoll Pharma managing director D M Gavaskar refused to comment on the matter. Nicholas Piramal chairman Ajay Piramal also declined to comment.

According to analysts, Knoll has very strong OTC brands, which would have contributed much more than last years figure of 14 per cent of the companys total turnover in the current year. However, returns from the formulations business are significantly higher, they added. Besides, promoting OTC products involves high expenses.

The OTC market in the country has been developing in the categories of cough/cold preparations, antacids, balms and analgesics. Of the total formulations market, worth Rs 9,125 crore in 1996, six per cent comes from cough and cold preparations. Pfizer, Rhone Poulenc, Parke Davis and Glaxo account for 42 per cent of the cough/cold market.

Antacids generate four per cent of total formulation sales, with Parke Davis, Knoll Pharma and Nicholas Piramal accounting for 45 per cent of total antacid sales.

Smithkline Beechams product portfolio in the OTC category includes Tums, the antacid and Crocin, acquired from Duphar Interfran. Parke Davis brand of antacid Gelusil is among the top revenue earners for the company.

Nicholas Piramal has Polycrol in the antacid category and Saridon as well as Aspro in the pain-killers category. As the company is targeting a Rs 100-crore turnover from OTC products by the year 2000, it makes sense for it to acquire some OTC brands. Nicholas is also setting up a joint venture with Reckitt & Colman.

Move aimed at improving realisations

Knoll Pharmas decision to exit from the OTC business is part of an overall restructuring strategy aimed at improving realisations and cutting costs.

Knoll AG started its Indian operations through German Remedies, in which it held a stake along with four other German companies. Later, Knoll took over the prescription drugs business of the UK-based Boots Plc. Boots Indian subsidiary, Boots Pharma, was renamed Knoll Pharmaceu-ticals Ltd.

Knoll AG then sold its stake in German Remedies to Asta Medica as it now owned a separate pharma company.