Novartis India on Friday said it has entered into an exclusive sales and distribution agreement with Dr. Reddy’s for its established brands which includes popular pain relief Voveran range, the calcium range and methergine (women health) in India.
Novartis India said its strategic business decision will lead to the separation of approximately 400 employees due to role redundancies.
“We understand the implications of this difficult decision on
those impacted and their loved ones and we are extending a severance package along with outplacement services,” the company said.
Novartis said the arrangement with Dr Reddy’s aims to further broaden access of these medicines beyond the current geographies to benefit many more patients.
Novartis AG will retain trademark ownership of these medicines.
“This brings together the manufacturing and development synergies of Novartis with the sales and distribution strengths of Dr. Reddy’s,” Novartis India said.
Novartis India said barring unforeseen circumstances, the deal has the potential to drive value for its shareholders.
Novartis India revenue from operations in FY21 stood at Rs 381.4 crore. The three brands and their line extensions contribute a major share of the Swiss drug maker’s revenue in India.
“Today, on one hand, keeping the patient interest at the center, we have entered this strategic business arrangement with Dr. Reddy’s Laboratories to extend access to our established medicines to benefit more patients in India efficiently,” said Sanjay Murdeshwar, country president and managing director, Novartis in India.
“On the other hand, we understand the implication on the roles of our colleagues in Novartis India Limited and are doing our best to support them,” he added.
Novartis said it is committed to India’s market. The company said it has a large footprint in India with over 10,000 full time employees. A large part of those employees service the global operations and provide R&D support.
Since January 2020, Novartis said it has hired more than 1,600 employees across the Novartis divisions and companies in India are planning to continue this hiring program in 2022.
“Over the last five years, Novartis has spent over $300 million in creating an R&D support center and services in India,” the company said.
“Novartis is also in the process of expanding further by setting up
an additional manufacturing plant at Kalwe, with an investment of approximately $49 million. This plant would manufacture oral cancer medicines for the global market,” the company said.
Kalwe plant manufactures generic formulation products that are exported to 138 countries across Europe, US, Canada, Latin America and other countries with a WHO presence.
For Dr Reddy’s, which is aggressively expanding in India, the distribution pact with Novartis portfolio with brands such Voveran is expected to further boost its domestic formulation business.