Following the decision of Monsanto and American Home Products (AHP) to merge their worldwide operations, the former's talks in India for a pharma joint venture with the RPG group could be in trouble.
While the Indian subsidiaries of Monsanto and American Home Products (AHP) are awaiting directives from their parent companies, industry sources say it would not make sense for Monsanto to have an independent pharma venture in India.
Monsanto's pharmaceutical products in the country are licensed to the RPG group company, Searle India. With the licence due to expire, RPG and Monsanto were in discussions for setting up a joint venture. Since a major part of AHP's worldwide turnover comes from pharma operations and it already has a pharmaceutical subsidiary in India, it is unlikely that Monsanto will now be able to have a separate company for its pharma activities.
While the new global company, yet to be named, will have combined sales of $23 billion, the pharma turnover will be $11 billion. The research and development investment will be $3 billion.
Shekhar Natarajan, managing director, Monsanto Enterprises, the wholly-owned subsidiary of Monsanto in India, said, "As you know, the announcement is just a day old and the first priority would be to streamline operations worldwide. Clarity on the strategy to be adopted in India will come later."
An RPG executive said that he would not be able to comment on the matter unless communication channels with Monsanto were opened.
According to the communication sent to the Indian subsidiaries, AHP and Monsanto will 'come together as equals'. The board of directors will consist of equal number of directors from both the companies, with Bob Shapiro from Monsanto and R Stafford from AHP as co-chairmen and co-CEOs. Worldwide, Monsanto shareholders will get a share in the new company for each share held by them, while the board will consist of 11 members from each company.
In India, the merger will create a company with sales of approximately Rs 470 crore. American Home Products has a holding in three Indian companies -- Wyeth Lederle, Cyanamid Agro and Acco Industries. Monsanto has two wholly-owned companies in India -- Monsanto Enterprises Pvt Ltd (MEPL) and Monsanto India Pvt Ltd (MIPL) and a 40 per cent stake in Monsanto Chemicals of India (MCIL).
Monsanto currently has a licensing arrangement with Searle India of the RGP group for its pharma products and has a 26 per cent equity in Maharashtra Hybrid Seeds Company (Mahyco).
