Dr Reddy’s Laboratories Eyes to Acquire Stake in Novartis AG

Reportedly, Dr Reddy’s is looking to pick up Novartis AG’s entire stake in Novartis India, valued at nearly INR 1,805 Cr at the current market price.

Swiss pharmaceutical company Novartis AG, has initiated a strategic review of its domestic arm, Novartis India Ltd. The strategic review aims to evaluate Novartis India’s position and prospects.

Reportedly, the Hyderabad-based Dr Reddy’s Laboratories is looking to pick up Novartis AG’s entire stake in Novartis India, which is valued at nearly INR 1,805 Cr at the current market price.

Novartis Healthcare includes the Novartis Corporate Centre in Hyderabad, the commercial arm of Novartis in India and the R&D teams, which currently conduct clinical trials at more than 300 trial sites in the country.

This comes days after the Swiss pharmaceutical firm announced that it will be carrying out a strategic review of Novartis India. The ‘strategic review’ includes an assessment of Novartis AG’s 70.68% stake in Novartis India.

Dr Reddy’s Acquisition Plans

Per a CNBC TV-18 report, Dr Reddy’s is keen to acquire the domestic-focused portfolio of Novartis and may offer a controlling premium for the purchase.

In February 2022, Novartis streamlined its operations by transferring sales and distribution rights of established medicines to Dr Reddy’s, resulting in approximately 400 job cuts.

The exclusive sales and distribution agreement includes medicines such as the Voveran range, calcium range and Methergine.

To the matter, Novartis India responded saying, “While Novartis AG has commenced the strategic review that will include an assessment of its 70.68% shareholding in Novartis India Limited, no decision has yet been taken regarding the eventual outcome.”

The Swiss Pharma company further clarified that the review will not affect its other wholly-owned subsidiary Novartis Healthcare.

Adding to it, the pharma company noted that there is no assurance that the strategic review of Novartis India Limited will be completed in 2024, or that the outcome would result in the implementation of any transaction.

Novartis employs more than 8,100 associates in India and claims to remain deeply committed to the country with a footprint that has expanded significantly in recent years.

Novartis’ Bold Moves

Last month, Novartis India vice-chairman & MD Sanjay Murdeshwar announced his resignation with effect from April 2, 2024.

According to Novartis, in the three months ended December 31, 2023, the company posted a INR 26 Cr profit, compared to INR 7.6 Cr in the corresponding period last year.

In its annual report for 2022-23, Novartis India had said that the idea behind the arrangement with Dr Reddy’s was to broaden access to these medicines beyond the current geographies to benefit many more patients and that the new commercial model had helped the company reach more healthcare professionals and patients, thereby yielding positive results.

Formed in 1996 through the merger of two Swiss companies: Ciba-Geigy and Sandoz, Novartis AG is a Swiss multinational pharmaceutical corporation headquartered in Basel, Switzerland. The Pharma company operates in 130 countries, reaching over 250 million patients worldwide. In 2023, Novartis reported revenue of $45.44 billion

Further, Novartis Healthcare is a wholly owned subsidiary of the Novartis group in India. Located in Hyderabad, it serves as a central hub for various administrative functions and strategic decision-making.

Shares of Novartis India hit a 14-year high on Monday amid reports that Dr Reddy's Laboratories Ltd is in a race to acquire Novartis AG's stake in the India unit. Dr Reddy's stock also hit an all-time high following the reports.