MNCs, Indian drugmakers diverge to mutual gain: How win-win is it?

Novartis exits India's mass-market generics, signalling a deeper split between MNC innovation bets and domestic pharma scale

For decades, multinational pharmaceutical companies and Indian drugmakers worked in ways that supported each other: MNCs brought innovation and brands, while Indian companies built scale through generics and cost efficiency. There was an important overlap — generic drugs — but this is shrinking fast. And the consequences are reshaping India’s gigantic pharmaceutical market. 

The clearest signal came last month when Novartis decided to exit its listed arm, Novartis India Ltd (NIL), selling its entire 70.68 per cent stake to a private equity-led consortium. The deal, which could reach nearly ₹2,000 crore if the open offer is fully subscribed, ends the Swiss drugmaker’s decades-old presence in India’s public markets. 

Novartis operates in India through NIL and Novartis Healthcare Private Ltd (NHPL). While NIL markets prescription, generic and over-the-counter medicines with a focus on transplant immunology, NHPL, a wholly owned subsidiary, includes the commercial 

arm of Novartis in India, the Novartis Corporate Centrein Hyderabad, and R&D teams. 

The pharma giant’s retreat wasn’t sudden — it was the culmination of a strategy Novartis has been executing globally for years. 

Innovation-first strategy  “Novartis has transformed into a pure-play innovative medicines company,” said Amitabh Dube, country president and managing director of Novartis India. The focus, he explained, is on “areas of high unmet need where advanced science can deliver meaningful improvements in patient health outcomes.” 

As disease patterns shift towards chronic and non-communicable conditions, Novartis is doubling down on patented, high-value therapies—particularly in cardio-renal metabolic diseases and oncology. “Our focus is, therefore, bringing first-in-class or best-in-class medicines to patients,” Dube said. 

In this strategy, India plays a key role. 

“Nearly every molecule launched by Novartis globally is supported by our scientists working at the Novartis Corporate Center,” Dube said. That centre, which has just completed 25 years, employs more than 9,000 people and is the company’s largest such unit globally. 

India is no longer just a sales market. It is a science, data, and capability hub. In this scenario, the mass-market, the so-called ‘branded generics’ business — once the backbone of NIL — no longer fits. 

The company made that clear in its statement announcing the sale, stressing that the transaction “will not impact” NHPL, which houses its innovation-led commercial operations, R&D teams, and clinical trials across more than 300 sites in the country. 

The message is clear: Innovation stays, legacy portfolios go. 

Pfizer, too, appears to be charting a similar course. “India has moved well beyond being a high-volume market for global multinationals,” said Meenakshi Nevatia, country president of Pfizer India. “Today, it is a strategic pillar and an indispensable hub for shaping innovation and building manufacturing resilience.” 

Nearly 70 per cent of Pfizer’s medicines sold locally are manufactured in India. Its largest sterile injectable facility outside the US is here — and it is fully export-oriented. The company’s global R&D centre in Chennai employs over 2,000 people, and 40 of Pfizer’s global clinical trials are now conducted in India, including in oncology and rare diseases. 

This enables Pfizer to bring “advanced, first-in-class medicines like novel anticoagulants, advanced migraine therapies and vaccines” to Indian patients, Nevatia said, while also feeding into its global innovation engine. Pfizer has increasingly leaned 

on licensing and marketing partnerships with Indian firms, retaining science and intellectual property (IP), while outsourcing commercial execution. Last December, it entered into a partnership with Cipla, which will exclusively market and distribute five Pfizer brands in India — cough syrups Corex DX and Corex LS, the non-steroidal anti-inflammatory drug Dolonex, the proton pump inhibitor Nexium, and the oral antibiotic Dalacin C. Pfizer will continue to manufacture, source and supply these products for India.

 

Walking away? 

The Novartis move is new in that it marks the first such total exit by an MNC in the Indian pharma market — partial divestments have been happening for years. 

According to Krishnanath Munde, associate director at India Ratings and Research, the shift is structural. “India’s pharma landscape is undergoing a decisive shift as MNCs, strained by price caps, patent pressures, and the cost of operating in a branded generics-driven market, scale back broad portfolios and focus on specialty therapies,” he told Business Standard. 

When MNCs divest legacy brands, Indian companies step in, snapping them up as these brands remain trusted names with strong doctor-recall and stable cash flows. 

“Their divestment of legacy brands has opened the door for Indian companies to move up the value chain, acquiring trusted, high-margin portfolios that deliver immediate scale and stronger therapy depth,” Munde said. 

Sheetal Sapale, vice-president (commercial) at Pharmarack, laid out the mechanics plainly. As products go off-patent, branded generics — those made by well-known companies — enter the market at affordable prices. At the same time, Indian companies are also able to launch life-saving drugs for niche diseases at lower prices. 

The result is a win-win: MNC brands lose pricing power but retain brand equity, while Indian firms gain both by acquiring them. 

Licensing deals are thus on the rise — Cipla now sells Novartis’ Galvus, Dr Reddy’s Laboratories sells Voveran, Emcure sells cardiac brands from Sanofi. Sanofi has narrowed its focus, exiting large parts of its pharma portfolio — nutritionals went to Universal Nutriscience, and Soframycin to Encube. 

“These are some major deals,” Sapale said. “There will be many smaller ones.” 

Each deal reinforces a pattern: MNCs exit where scale and speed matter; Indian firms double down. According to Sapale’s analysis, the share of MNCs firms in the Indian pharma market has come down from 22 per cent in 2013 to 14 per cent in 2025.

 

Strategy, not stress 

Vivek Tandon of Primus Partners rejected the idea that MNCs are under financial pressure. “This change has less to do with financial strain and more to do with strategic alignment,” he said. 

Legacy brands may still generate cash, but they don’t fit an innovation-led, globally scalable model. In some cases, they increase operational complexity, dilute margins, and consume management bandwidth. 

“Rationalising such assets allows sharper capital allocation and greater focus on high-return innovation platforms,” Tandon said. 

Manufacturing and marketing mass-market generics, by contrast, require fast decisions, pricing flexibility, and deep local insight — areas where Indian companies, with local headquarters, are structurally better placed. 

Despite shrinking portfolios, MNCs’s revenue grew faster in all but one month of 2025. 

Month-wise data for 2025 from Motilal Oswal and IQVIA shows multinational pharma companies posting better growth rates than their Indian peers. In January 2025, MNCs posted 10.7 per cent growth versus an 8.3 per cent growth by Indian firms. Barring February, the trend has remained largely the same throughout 2025. 

The main reason is that high-value, patented therapies deliver more growth per molecule than a basket of price-controlled generics. Indian companies, meanwhile, are still building their innovation engines — an expensive, time-consuming process. 

A CEO of a Mumbai-based pharma company, speaking anonymously, traced the roots of this divergence. Indian pharma grew by making low-cost generics, while MNCs poured billions into innovative drugs and gradually deprioritised generics. 

Indian companies are now trying to pivot toward R&D and niche products — but with limited resources, that transition will take time. “The domestic market is bread-and-butter for Indian players,” the CEO said. “For MNCs, it’s just a fraction of their global revenue, and largely non-core.” 

What the Novartis deal means 

The Novartis India transaction underlines that this divergence is here to stay. 

The buyer consortium — WaveRise Investments, ChrysCapital Fund X and Two Infinity Partners — will take full control. Novartis will cease to be a promoter. The company must even change its name within 120 days, erasing all references to the Novartis brand. This is a full exit from India’s mass-market pharma business. For Novartis, the listed Indian unit had become “profitable but low-growth” — ideal for private equity, but peripheral to a research-driven multinational focused on oncology, immunology, and neuroscience. 

Both the MNC and the domestic pharma approaches are rational responses to very different incentives, feel industry insiders. 

MNCs are building fewer, deeper bets — anchored in innovation, global scale, and IP protection. Indian companies are consolidating the domestic market — buying brands, expanding therapy depth, and leveraging their unmatched commercial reach. 

To be sure, India remains central to global pharma — but it’s not in the same way as it was decades ago. The overlap in generics is gone. The divergence is real. But while the industry watches out for the next phase of growth, the long-term health implications of this divergence remain unclear. A shifting burden of disease points to the need for Indian companies to quickly scale up investments in R&D from the current levels of 6-7 per cent of revenue, compared with global levels of 15-20 percent. India cannot afford to play catch-up for long.