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| GSK Consumer arm halts operations in AP unit |
| BS Reporter / New Delhi Dec 12, 2009, 00:17 IST |
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Takes decision due to political unrest in state
GlaxoSmithKline Consumer Healthcare (GSKCH) today said it had temporarily suspended operations at its factory in the industrial estate of Dowlaiswaram in Andhra Pradesh, due to political unrest in the state after the Centre’s move to create a separate state of the Telangana region.
The company, said the Executive Vice-President (Legal) Surinder Kumar, was currently reviewing the situation and would decide on resuming operations on Saturday, if the tension eased. "This is a temporary closure, which is not likely to have an impact on business," he said.
The maker of products such as Horlicks, Boost, Viva and Maltova employs 800 people at its Andhra facility. The unit produces 30 kilo tonnes of nutritional products, a fourth of the company’s total capacity in the segment. There are two other factories, at Sonepat in Haryana and Nabha in Punjab.
Meanwhile, UK-based GlaxoSmithKline's (GSK) plan to fuel its growth through acquisitions, particularly in emerging markets like India, is being hampered by the high valuations demanded by promoters of the targeted company.
Speaking at a conference call from London, GSK's Emerging Market President Abbas Hussain today said most of the firms, which were on GlaxoSmithKline's radar in the emerging markets, had large promoter holdings and the valuation demanded by them were so high that GSK would not like to go for a deal.
Hussain said, in some respects, it was quite difficult to determine the value of the company. Those firms had large promoter holdings and the latter did not wish to exit in the current scenario, where the companies were doing well, and were charging high prices.
He declined to comment on specific queries related to acquisitions.
Hussain, however, said: "There is a view that they (promoters) do not want to exit, there is no reason to exit at this stage and valuations at which they choose to exit is so high that, quite frankly, as far as GSK is concerned, we would not participate."
Global drug makers such as GSK and Pfizer are increasingly looking to low-cost destinations like India to tie up supplies as they battle falling prices and increasing generic competition.
Earlier in June, Hyderabad-based Dr Reddy's entered into a pact with GSK under which the London-based company will get access to its drugs and supply these to other emerging markets such as Africa, West Asia, and Latin America.
Asked about reports indicating that GSK was looking to acquire a stake in the company, he declined to comment but said the immediate task ahead of them was to consolidate the deal with Dr Reddy's by getting registration of products done with various governments, so that they can launch and commercialise these products by 2012.
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