Novartis opens third generic drugs plant in India

By siliconindia staff writer   |   Thursday, 20 May 2004, 07:00 Hrs
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MUMBAI: Sandoz, the generics division of Swiss drug maker Novartis AG, has opened a third plant in India, an investment of $13 million that is part of a global expansion of production facilities.
The world's number two generics player preferred to increase its output in India directly, and currently had no plans to pick from a rich pool of Indian drug companies, its chief executive said.

"We are taking a major step towards strengthening our worldwide production facilities. The Indian plant will substantially improve our competitiveness in all generic markets," chief executive of Sandoz Christian Seiwald told a news conference late on Tuesday.

"It is no secret that it most likely will be the best cost competitive plant we will have worldwide," he said.

With the third plant in Kalwe, a suburb of India's financial capital Mumbai, Sandoz expects to add 200 people to its headcount of 1,000 employees in India. The plant will supply tablets and capsules worldwide, but mainly to the United States and Europe.

Sandoz opened a new plant in Poland earlier this month and another one will be inaugurated in Romania soon.

"India has achieved a lot not only as a most attractive production place but also provides great product development abilities," he said.

Already several global pharmaceutical firms source drug ingredients from Indian companies that have low costs and plants meeting quality standards of overseas health authorities.

Although Sandoz remained open to a local acquisition, Seiwald said the high price-to-earnings ratios of Indian pharmaceutical companies, were a deterrent.

"Our objective here is to have organic growth ... but we are also screening the market. At the moment Indian stocks are trading at extremely high prices when you compare the ratios with, let's say, in the United States," he said.

Novartis is a rarity among global pharmaceutical companies in having a strong and expanding generics business which has been aggressive in taking on big-name rivals.

While European sales accounted for 44 per cent of the company's global sales last year, Seiwald said he expected the United States, which contributed 38 per cent of sales last year, would overtake Europe in the near future.

The company has also plans to expand its generics business in markets like Japan, China and Canada, Seiwald said.

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