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Novartis-GSK-Eli Lilly deal: Competition Commission hurdle remains

While all the companies have significant presence in most of these segments including in India, it is likely that some of their interests may overlap post the deal

Sushmi Dey  |  New Delhi 

The multi-billion dollar three-way of with (GSK) and is likely to trigger approvals from various anti-trust authorities, including a scrutiny by Commission of India (CCI), industry officials and law experts said.

The global entails some key business segments such as oncology, vaccines, over the counter products and animal health. While all the have significant presence in most of these segments, including in India, it is likely that some of their interests might overlap after the deal, impacting in the


For instance, GSK, now the top entity in the domestic vaccine with around 23.5 per cent share, would further consolidate its position in the segment, after acquiring from the Swiss drug major’s portfolio. This also assumes significance because the Indian pharmaceutical is highly fragmented and an increase in the product portfolio would immediately reflect in share.

According to a spokesperson, the company would secure from brands like Bexsero, a new vaccine for the prevention of meningitis-B, and a meningitis ‘ABCWY’ combination vaccine being developed.

According to data recorded by IMS Health, a leading research agency in the health care segment, clocked annual sales  in the vaccine segment of Rs 368.8 crore of the domestic during the year ended March. Novartis, generated Rs 110 crore in the same period. However, this data reflect only sales through stockists; in and vaccines, a lot of sales is generated through non-stockist routes.

Similarly, Novartis, already strong in the segment with products such as Glivec, is expected to gain a significant share across regions by acquiring GSK’s cancer products. In the domestic market, Pharma, the Indian arm of GSK, sells four brands in the segment — Revolade, Tykerb, Votrient and Hycamtin. As part of the deal, these products will be sold or transferred to

“Given the size of the businesses involved, these transactions will probably trigger approvals from anti-trust authorities in various jurisdictions. As there is bound to be some horizontal consolidation, it will be interesting to see how authorities with these transactions,” said Khaitan & Co partner Rajat Mukherjee.

On Tuesday, announced a major revamp of its businesses, swapping assets with and selling its animal health arm to Eli Lilly, in a bid to simplify its business and increase its focus on high-margin cancer medicines. As part of the proposed transaction, and agreed to trade about $20 billion worth of assets. agreed to buy GSK’s products business for $14.5 bn, while selling its business, excluding flu, to for $7.1 bn. Besides, will pay up to $1.5 bn more if certain milestones are met. It will also form a consumer health joint venture, in which GSK, with an equity interest of 63.5 per cent, will have majority control.

In India, the current regulations require a combination or a merger & acquisition to seek approval if the combined assets of the enterprises are worth more than Rs 1,500 crore or is more than Rs 4,500 crore in this country. If either or both have assets or turnover outside India, too, there must be approval from if the combined assets are more than $750 million, including at least Rs 750 crore in India or there is turnover of more than $2,250 mn, including at least Rs 2,250 crore in India.

Experts say despite it being a global deal, the transaction will have to undergo scrutiny because of the scale of operations and impact on the domestic “The will have an impact on the interest of the Indian consumer,” said M M Sharma, head of law and policy at Vaish Associates.

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First Published: Thu, April 24 2014. 00:50 IST
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