Multinationals Consolidate Indian Market Presence

A growing number of multinational drug firms are consolidating their presence on the Indian market, amid the country's efforts to improve its patent regime and encourage foreign participation in the local pharmaceuticals sector.

The trend is evidenced by the decision of the local affiliate of UK drug major GlaxoSmithKline, the Indian market's leading multinational, to carry out an INR2.3bn (US$52.75mn) equity buyback programme, equivalent to some 25% of its share capital. The company, which posted only moderate sales growth of 3.8% in the year to December 2003 to INR1,191bn (US$262mn), had been widely expected to consolidate its equity structure for some months. Meanwhile, Germany's Merck KGaA has also applied to set up a wholly owned subsidiary in the country. The drug major's local activities were previously managed via a 51% owned affiliate.

The trend toward greater multinational investment in India has also been evidenced by Roche, Bayer, AstraZeneca and Eli Lilly's recent announcements of expansions to their local operations. However, many drug firms continue to caution that a flawed implementation of the new patent law and the government's harsh pricing policy could discourage further investment aimed at boosting domestic market sales.