|
At the beginning of 2000, the Indian government announced
a change in policy regarding the level of investment by
foreign multinationals in their Indian subsidiaries and
new joint ventures; foreign companies can now have equity
stakes of up to 74%, previously it was 51%.
During 1999, a number of multinationals had applied to India's
Foreign Investment Promotion Board (FIPB) for 100% ownership
of an Indian subsidiary. US company Pfizer was granted approval
to set up a wholly-owned subsidiary, on condition that Pfizer
invested US$1 million in the new operation and manufactured
products at the new plant from basic stages.
The approval is pending review by the minister for industry
and commerce, the outcome of which will set a precedent
for other multinationals in India.
The FIPB also approved a request by Bayer to increase its
stake in its joint venture with the Zydus healthcare group
from 51% to 100%. The approval was subject to several conditions,
which included amongst others that the new wholly owned
subsidiary invested DM1 million in R&D and conduct clinical
research in India as part of Bayer's global clinical research
programme. It must also export products valued at DM1 million
in the first year of operation, rising to DM3 million by
the third year.
Plans were announced to split Duphar-Interfran, a joint
venture between the Belgian company Solvay and Mr Vasant
Kumar, into a pharmaceutical company 'Solvay Pharma India'
owned 60.5% by Solvay, while Duphar-Interfran, owned 60.5%
by Mr Kumar, would retain the chemical business.
|
Foreign
Subsidiaries in India
|
|
Company
|
%
ownership
|
Corporate
Owner
|
| Abbott
|
51
|
Abbott,
USA |
| Astra-IDL
|
25.75
|
AstraZeneca,
UK |
| Biddle
Sawyer |
51 |
Glaxo
Wellcome, UK |
| Ethnor
|
40
|
Johnson
& Johnson, USA |
| Knoll
|
51
|
BASF,
Germany |
| Novartis
|
51
|
Novartis,
Switzerland |
| Reckitt
& Colman |
51
|
Reckitt
Benckiser, UK |
| SmithKline
Beecham |
40
|
SmithKline
Beecham, UK |
| UCB
|
51
|
UCB,
Belgium |
| Uni-Sankyo
|
40 |
Sankyo,
Japan |
Source:
Pharmaceutical Company Directory
The above table consists of a selection of
subsidiaries partly owned by multinational corporations. The
list illustrates the extent of the presence of foreign companies
in India, and the potential for further investment as the
nature of the market changes and becomes more favourable for
overseas companies.
It is anticipated that there will be an increase in mergers
and acquisitions in the next five years as the Indian pharmaceutical
industry restructures in anticipation of the introduction
of product patent protection
in 2005. Dr Reddy's Laboratories has announced plans to purchase
a 45% controlling stake in another Indian company, American
Remedies, signalling a change in company strategy from acquiring
brands to acquiring companies.
Foreign investment has been made easier for Indian pharmaceutical
companies by the Indian government's decision to raise the
ceiling for automatic approval and to liberalize overseas
acquisition regulations. Approval will not now be needed for
foreign investment of up to US$50 million, compared with a
previous level of $15 million.
In addition, the government has extended the facility for
allowing pharmaceutical and biotechnology companies to acquire
firms up to US$100 million through equity swaps of American
Global Depository Receipts (ADRs/GDRs). Moreover, companies
could exceed the US$100 million limit if their export earning
allowed them to do so. The companies can spend as much as
10 times of their export earning to acquire overseas firms
through stock swaps.
Following the announcement, Indian company Dr Reddy's Laboratories
stated that it was planning to raise up to US$200 million
through an issue of American Depository Shares. Dr Reddy's
and Cheminor Drugs, a 35.3% owned subsidiary of the Dr Reddy's
group of companies, are in the process of merging. The merger
is a prelude to the expected ADR listing in the US, which
is expected to raise funds for expansion overseas.
Dr Reddy's also announced that it would assume full control
of its US subsidiary Reddy Cheminor by acquiring the 25% American
holdings in the company, through the subsidiary Cheminor Drugs.
Ranbaxy has announced plans to enter the German generics market
by acquiring Bayer's generics pharmaceutical business, which
has sales of US$4 million.
|
Indian
Subsidiaries Worldwide
|
|
Subsidiary
|
Country
|
Owning
Indian Company
|
| Glenmark
|
Canada,
Portugal |
Glenmark
|
| Dr
Reddy's Labs |
Netherlands,
Hong Kong, Russia, |
Dr
Reddy's Labs |
| Himalaya
Drug |
Russia
|
Himalaya
Drug |
| Lupin
Chemicals |
Thailand
|
Lupin
|
|
Ranbaxy |
China,
Malaysia, Poland, Vietnam |
Ranbaxy
|
| Reddy
Cheminor |
USA
|
Dr
Reddy's / Cheminor |
| Torrent
|
Russia
|
Torrent
|
| Wockhardt
|
Ireland,
Saudi Arabia |
Wockhardt |
Source:
Pharmaceutical Company Directory
The above
table lists a selection of companies belonging to Indian companies,
taken from the IMS HEALTH Pharmaceutical Company Directory
(PCD). Indian
companies are increasingly looking to expand their operations
in the West, having built up a substantial presence in Asia
and Eastern Europe, where companies such as Ranbaxy and Himalaya
Drug Company are well known.
IMS HEALTH's Pharmaceutical Company Directory contains details
on over 160 companies operating in the Indian market, with
a worldwide coverage of 5,400 companies in over 70 countries.
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