Cipla and Serum to focus on marketing tie-up first

Is a new biggie in Indian pharma in the making? Not quite. Or at least, not at the moment. This question follows market speculation that Mumbai-based pharma major Cipla and Pune-based vaccine major Serum Institute of India are in a dialogue to consider a possible merger.

Cipla in a response to Business Today said: "Both the companies (Cipla and Serum) are committed for a long-term partnership for the distribution of vaccines in Europe. We have no further comment to make."

Business Today also learns that there are talks on between the two companies but the focus at the moment is only on executing an agreement aimed at leveraging Cipla's network in Europe to market Serum's vaccines.

It is however not certain if the talks between the two companies could go beyond the marketing tie up.

Part of this emerges from the clarification that Cipla has given the Bombay Stock Exchange, where it says, the "company (Cipla) is currently focused on making the vaccines available in Europe under the distribution agreement. If further opportunities arise out of the partnership, stock exchanges will be informed of the same at the appropriate time."

Given this, even if it is at the moment within the realms of speculation, it has not stopped analysts from pointing out that a potential merger could be a win-win for both as Cipla has a huge global presence and Serum has a healthy vaccine portfolio that could leverage Cipla's that presence.

Serum Institute of India is a leading producer of some important vaccines like those for Diphtheria, Tetanus and Pertussis. And Cipla, which has a near equal revenue split between India and overseas, has been growing its direct presence in some locations abroad, in Africa for instance.

However, in terms of the pecking order of pharma companies in the Indian retail market, there may not be a major change if the merger does happen.  

Cipla is today the third largest after Abbott and Sun Pharma going by the rankings put out by pharma market research company AIOCD AWACS.

In future, only Sun Pharma after integration with Ranbaxy would move up to the top slot with Abbott at second and Cipla and perhaps Cipla-Serum combined, third. For the moment, it is important to watch the two companies.