Tue, Dec 17, 2013 - Page 15 News List

Glaxo’s US$1bn raises India stake

Bloomberg

GlaxoSmithKline PLC offered to spend US$1 billion to raise its stake in its Indian unit to tap increasing demand for medicines in the second-most populous country.

Glaxo is to offer 3,100 rupees (US$50) apiece to acquire up to 20.6 million shares of the Mumbai-based unit to raise its stake to 75 percent from 50.7 percent, the company said in an e-mailed statement yesterday. That is a 26 percent premium to the Indian drugmaker’s closing price of 2,460.15 rupees on Friday last week.

Glaxo aims to increase its presence in India’s market for drugs, estimated to be worth about US$12 billion by PricewaterhouseCoopers. Shares of the Indian unit surged as much as 20 percent in Mumbai trading, headed for the biggest gain in 21 years.

The unit makes, distributes and sells respiratory, cardiovascular and cancer drugs, antibiotics and vaccines. Its top four products in India are the antibiotic Augmentin, Calpol, Zinetac and Ceftum.

Glaxo’s unit had sales of 26 billion rupees in the year ended December last year, according to the statement. It employs 5,000 people and is investing 8.6 billion rupees in a new manufacturing unit, which will probably be built in Bangalore and be completed by 2017, chief strategy officer David Redfern said in a telephone interview yesterday.

India’s government announced details this month of a policy aimed at making drugs more affordable. The policy set the prices of the essential medicines at the average of all brands that have a market share higher than 1 percent. The Glaxo unit’s profit in India is estimated by analysts to drop for a third straight quarter, according to data compiled by Bloomberg.

“The price controls have had an impact this year, but we take a long-term view,” Redfern said. “I think there’s tremendous opportunity here in India — the opportunity to bring medicines and vaccines to address unmet medical needs.”

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