Pfizer To Close A Formulation Plant

The Rs 252-crore Pfizer Ltd will close one of its formulation plants as part of its restructuring exercise to cut costs. The axe could fall on either its Ankleshwar unit or the Thane plant.

C P Aldenhoven, managing director of Pfizer Ltd, said returns from the company's Indian operations were the lowest in the world.

Insufficient patent protection coupled with drug price control makes it very difficult for the company to operate profitably, he added.

Talks are on between the Pfizer management and its union and either of the two formulation plants could be closed down. The odds might weigh in favour of stopping production at the Ankleshwar plant, currently operating at 23.5 per cent capacity, as the Thane plant is larger and has better infrastructure.

While the Ankleshwar plant is modern, it does not have sufficient capacity to handle extra production load from the Thane plant in event of the latter's closure.

Last year, Pfizer sold its Kalyani, West Bengal plant to Dabur for Rs 10.50 crore. The company has a basic fermentation unit at Chandigarh that produces the terramycin range.

The company has offered a voluntary retirement scheme (VRS) at all its plants to cut down on labour costs and streamline operations. According to Nishid Shah, research head at Inquire Indian Equity Research, Pfizer is targeting reduction in the staff cost-to-sales ratio from the present level of 15.85 per cent to 8.5 per cent in the next two years.

Aldenhover was extremely critical of the present patent regime in India and cited the government's lackadaisical approach towards patents as the reason behind the parent company's reluctance to make large capital investments in India. He also said that Pfizer Inc, the US parent, would not increase its stake in the Indian arm as of now.

Pfizer Inc introduced five new drugs- Doxasocin, Flucanozole, Amlodipine, Sertraline and Azithromycin over the last four years. Although these products contribute around 65 per cent to worldwide sales, they have not been introduced in India as the company is genuinely concerned about their products being copied.

Aldenhover said that there was still some hope for the Indian subsidiary. Pfizer will introduce some of these products in India. During the current year, line extensions of Dolonex (anti-rheumatic), and Fasigyn (amoebicide) will be introduced, he said.

Pfizer will also make substantial investments in conducting Phase Three clinical trials in India. Currently, it has six new drugs in phase three trials and is expecting 14 new drugs this year.