The $63 billion (Rs 3.1 lakh crore) merger plan involving Pfizer and Wyeth, the two drug-making giants, may have mixed effects on India’s own manufacturers.
Industry analysts feel that while suppliers of active pharmaceutical ingredients (API) could have one less global giant to supply to, contract research and manufacturing (CRAMS) companies could reap rich benefits. API is the basic chemical for most medicines.
Pfizer has said that there would be rationalisation of manufacturing and sourcing activities from all over the world. “This may include cutting down on its own manufacturing capacity, in which case CRAMS players stand to benefit,” said Sarabjet Kaur Nagra, analyst, Angel Broking.
API suppliers to Pfizer and Wyeth, including Cipla and Aurobindo Pharma, may need to renegotiate their deals with the merged entity, said an analyst on condition of anonymity.
Indian manufacturers are favoured by foreign drugmakers for lower costs and higher efficiencies as far as supply of API and contract manufacturing is concerned. Most analysts, however, feel that the Indian patient has little to gain, or lose, from the deal.
India arms of both companies are small compared with India’s own drug makers. Pfizer India’s sales were at Rs 770 crore last year, while Wyeth clocked close to Rs 350 crore in an industry of Rs 25,000 crore. Growth in both companies has been slow, and new product launches have been few and far between. This is not expected to change much.