The review of Novartis’ listed entity in India by its Swiss-parent reflects the drugmaker’s intent to focus on “pure-play innovative medicines”, say pharma industry observers.

Multinationals are increasingly looking to bring in their innovative medicines, rather than operate in the branded generics segment that is competitive and not in their scheme of things, said Vishal Manchanda, Senior Vice-President (Institutional Research) with Systematix Group, explaining Novartis AG’s decision to review the operations of Novartis India Ltd (NIL).

Over two weeks ago, commenting on the company’s global performance (2023), Novartis Chief Executive Vas Narasimhan had said that Novartis had “completed its strategic transformation into a pure-play innovative medicines company”.

Outlining its four core therapeutic areas, (cardiovascular-renal-metabolic, immunology, neuroscience and oncology), the multinational also pointed to its priority geographies for growth — the US, China, Germany and Japan. Last year (October 3, 2023) also marked Novartis’ break from the Sandoz generics and biopharmaceuticals operations.

Against this backdrop comes Novartis’ decision to review NIL, including the parent company’s 70.68 percent shareholding in the company. Novartis is in India through its listed entity and its wholly-owned subsidiary, Novartis Healthcare Private Ltd (NHPL), which is not under review.

The company’s innovative products are being brought into the country through NHPL, triggering market speculation that NIL would be delisted or entirely on the block, say industry observers. Novartis employs over 8,000 people in India, and NIL has 46 employees, a source told businessline. NIL does not have a manufacturing facility in India, and last month Novartis India’s Vice-Chairman and Managing Director Sanjay Murdeshwar said he was resigning from April 2. His exit is the third such in about six years.

Key brands

Some Novartis brands are already being distributed though alliances — pain brand Voveran through Dr Reddy’s Laboratories, a February 2022 decision that resulted in the separation of 400 people due to role redundancies. Last April, Cipla formalised an agreement with Novartis to make and market diabetes therapy Galvus and its combination brands from January 1, 2026. And in December 2019, Cipla acquired the brand name and trademark rights for Vysov and Vysov M (Vildagliptin + Metformin) of the anti-diabetic drug, Vildagliptin for the Indian market. The company had been co-marketing Vildagliptin in agreement with Novartis.

While delisting comes with its own challenges (given the high stockprice), a sale would be difficult at present day market-cap,say industry-hands. The other option is to sell the remaining brands in the company, but that would hollow-out NIL, explains Manchanda.

Meanwhile DRL did not comment on reports that said DRL had evinced interest in picking up the parent company’s stake in NIL. Separately, Novartis’ expressed its commitment to India, adding that NHPL included its Corporate Center (Hyderabad), the commercial arm of Novartis in India, and research and development teams, which conduct clinical trials at more than 300 trial sites in the country.