Swiss pharma giant plans to shut Indian unit

By SiliconIndia   |   Friday, 23 July 2004, 07:00 Hrs
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KOLKATA: Novartis India, part of the Swiss pharma giant is considering shutting its manufacturing facility in India. Novartis has been hit very badly by the changing business dynamics of the anti-tuberculosis bulk drug, rifampicin, which is currently manufactured at the Mahad facility in Maharasthra, reports an Indian daily.

The anti-TB market, according to the daily, has been facing severe challenges for sometime, affecting the generic business of Novartis in India. There has not only been a continuous downward revision in rifampicin prices, but changes in government policy of allowing cheaper imports despite having excess local capacity.

“Besides, treatment is largely moving towards DOTS which is a tender-based business. All this is having a sustained impact on the anti-TB business. Novartis is therefore keeping a close watch on the rifampicin business including the Mahad facility. We are evaluating various options,” said Ranjit Shahani, vice-chairman and MD, Novartis India.

Bulk rifampicin was a major profitable product in the generic portfolio of the company in India. Incidentally, the de-growth in this drug market has resulted in the overall fall of Novartis’ generic business contribution to the total turnover. For instance, while generics used to contribute 26% of the company’s turnover in ‘01-02, it fell to 22% of the Rs 505 crore turnover in ‘03-04.

It is unclear what Novartis India plans to do with this drug when the production is terminated. Indications are that the company may import the drug or enter into a contract manufacturing agreement in India. “We have preferred manufacturing rifampicin. But this doesn’t preclude any change in future plans,” Mr Shahani added.

In spite of this negative business scenario, Novartis is looking at a growth higher than that recorded by the industry in ‘04-05.

The shutting of the Mahad facility will be a step in this direction to improve the overall productivity. “Moreover, we will tap secondary and tertiary markets, increase field force numbers in uncovered territories and launch new products. We have already begun looking at tier 2 and tier 3 markets and have already covered 90 new territories in these areas,” Mr Shahani added.

Going forward, Novartis will focus on four therapeutic segments in India, namely cardio-vascular, central nervous system, pain and inflammation and gynaecology. The company is also on the look-out for acquiring brands in these areas.

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