Cipla shares jump on Pfizer talk

Share prices of drug major Cipla surged 2.67 per cent today, following reports that the company is in talks with Pfizer, the world’s largest drug maker, and with other leading companies for major supply contracts. Its share closed at Rs 328.70 today on the Bombay Stock Exchange (BSE) today, up from Rs 320.15 at close of trading, yesterday.

Cipla confirmed the discussions, but said such negotiations are part of its ongoing business model and does not involve any stake sale or strategic collaborations.

“Cipla has always followed a model of partnership and alliances in marketing its products, particularly overseas. We are in constant dialogue with number of multinationals towards developing products, regulatory packages and ultimately supply of products from our world class facilities,” said Amar Lulla, the joint managing director.

Pfizer is one such company with whom Cipla is in dialogue and there is nothing beyond the business discussions, he said.

Cipla, which does not market its formulations directly in major markets like the US and US, follows a business partnership model of supplying products through contracts to about 14 leading drug companies around the world. It has over 800 drug marketing registrations across the globe, including the US and Europe, said sources.

Meanwhile, analysts feel a major outsourcing deal with Pfizer could be a win-win situation for both companies. “Cipla has presence in about 180 countries and has core competence in production of anti-asthma, anti-HIV/AIDS and anti-cancer compounds. Pfizer’s two large outsourcing deals in India with both Claris Life Sciences and Aurobindo do not cover the products manufactured by Cipla,” said Ranjit Kapadia, vice-president, institutional research, with HDFC Securities.

The cost of making active pharmaceutical ingredients can be up to 50 per cent cheaper in India than the developed markets and India’s formulation development capabilities are unmatchable, said a McKinsey report on ‘India advantage’ published yesterday.