GSK-Novartis-Eli Lilly deal to have little impact in India: Analysts

The mega deal announced globally by GlaxoSmithKline Plc, Novartis and Eli Lilly will likely have little impact on the companies' India businesses, according to analysts tracking the unique transaction among the three pharmaceutical giants.

"The deal has very little impact in India, particularly for GSK," says Alok Dalal, analyst with brokerage Motilal Oswal. "It will be interesting to see how Novartis will manage the oncology business they get in India."

As per the three-part transaction announced on Tuesday, Swiss drug maker Novartis will acquire GSK's oncology - or cancer-products and divest its vaccine business (excluding flu) to the British giant.

The two companies will also create a joint venture combining their consumer health-care divisions. Separately, Novartis will divest its animal health division to US-based Eli Lilly.

Another analyst, who did not wish to be identified, says: "In India, GSK is largely an acute therapy company think cold, cough and its leading drug Crocin to treat fever, and so is Novartis, though it also has some offerings in chronic therapy in India think lifestyle diseases like diabetes. Eli Lilly is very small in India."

A spokesperson for GSK in India told Business Today that the India consumer business is not part of the joint venture with Novartis. "But subject to shareholder approval we will evaluate the opportunity to potentially sell some JV products in India," the spokesperson said.

The spokesperson also said the transaction will "substantially strengthen" GSK's vaccine business globally, where opportunities to build scale and combine high-quality assets are rare.

"The transaction will consolidate our position as a world leader in vaccines, supplying more than two million vaccines every day to more than 90 countries around the world. It is too early to give specifics for India as this will be all worked out as we move toward deal closing during early 2015."

Novartis India, the local unit of the Swiss drug maker, posted revenue of Rs 903.36 crore for the financial year 2012/13, according to Bombay Stock Exchange data. GSK has two units in India-GlaxoSmithKline Pharmaceuticals and GlaxoSmithKline Consumer Healthcare. The pharma unit posted revenue of Rs 2,546.15 crore for the year ended December 2013 and the consumer health-care company reported revenue of Rs 3,187.50 crore for the year ended December 2012.