GlaxoSmithKline (GSK) has paid £625m to increase its stake in Indian subsidiary to 75 per cent, signalling the importance of India to its emerging markets strategy.
A string of intellectual property (IP) battles in recent months have led some pharma companies to make noises about reducing their investment plans in India, but GSK’s chief strategy officer David Redfern said the country remains “a strategically important market”.
Raising its stake from a little over 50 per cent is “a significant vote of confidence in the future growth prospects of our pharmaceuticals business in India,” he added.
India’s pharma market reached a value of around $16bn last year, up nearly 8 per cent on 2012, according to figures from Business Monitor International, which notes that with a large population, substantial unmet medical needs and rising spending power it presents “strong commercial opportunities for pharmaceutical firms.”
Despite that promise, there have been developments of late that have dampened enthusiasm for the country.
The introduction of new price control regulation last year for a list of essential medicines raised some concerns about long term pharma market growth, despite the fact that it only applies to around one fifth of all medicines sold in the market.
However, GSK’s decision may have been influences by the dissolution in December of an inter-ministerial panel that was created to reduce patented drug prices, along with plans by the Ministry of Health and Family Welfare to create the Central Drug Authority (CDA) to streamline pharma regulation.
Arguably more worrying for research-oriented multinationals has been a series of decisions that have removed IP protection in India for drugs such as Novartis’ Glivec (imatinib), Roche’s Herceptin (trastuzumab) and GSK’s own Tyverb (lapatinib.
Taking a pragmatic stance on the issue, GSK chief executive Sir Andrew Witty said on a visit to the country last year that it was unsurprising that a fast-growing economy like India is wrestling with the issue of medicines pricing and short-term volatility is likely to be eclipsed by long-term growth potential.
GSK’s recent actions reinforce the view that India is clearly a priority market. Just last year, the company spent $900m upping its stake in its Indian consumer healthcare business, announced an £85m investment in a new manufacturing facility and formed a vaccines joint venture with Hyderabad-based firm Biological E to develop a six-in-one combination paediatric vaccine.