The Hindu Business Line : Novartis to sell TB bulk drug biz to Sandoz

IT has been ailing for some time now, but drug major Novartis India Ltd has made it official that it intends to sell its anti-tuberculosis bulk drug Rifampicin's business together with its Mahad facility.

Following the company's board meeting here on Friday, Novartis said it proposed to sell the Rifampicin business and facility to Sandoz Private Ltd for a consideration of Rs 30.77 crore.

Sandoz Pvt Ltd is a wholly owned subsidiary of Swiss pharma-multinational Novartis AG; the latter also holds 51 per cent in Novartis India.

While Novartis is into branded drugs, Sandoz is the second largest supplier of generic or chemically similar drugs worldwide.

Interestingly, only last year Sandoz opened its third plant in the country, at Navi Mumbai.

Pharma analysts told Business Line that the `intra-group transaction' was transparent, since the valuation was done by independent chartered accountant Bansi S. Mehta & Co.

The sale will be effective from April 1 or any date thereafter, Novartis said and added that it will seek shareholder approval, besides getting the necessary regulatory approvals.

A Novartis communication said the Rifampicin business had been facing severe operational challenges for some time now, mainly due to surplus capacities, cheaper imports and falling domestic prices.

And this had been a cause for concern, as the company did not expect the scenario to improve.

About 150 to 200 people are estimated to be involved with the Rifampicin business and plant, according to analysts. However, attempts to get an official confirmation on this from Novartis and Sandoz proved futile.

On why Sandoz picked up a business that had proved to be unviable for its branded drugs group company (Novartis India), an analyst said Novartis India was looking largely at the domestic market.

Price-control and imports from China had made it difficult for Novartis to operate the plant, she said.

Sandoz, on the other hand, may expand the portfolio of drugs that will be manufactured at this plant.

The acquired plant will fit into Sandoz's plan to increase its sourcing of drugs from India.

Mr Christian Seiwald, Chief Executive Officer of Sandoz GmbH, during his visit to India last year had said, "For any player in the generics industry, it is a must to be in India."

Today's deal bears testimony to that strategy playing itself out.

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