Bayer builds emerging markets presence through Indian JV with Zydus
This article was originally published in Scrip
Bayer HealthCare and Zydus Cadila have signed an agreement to form a 50:50 joint venture company, Bayer Zydus Pharma, to handle the sales and marketing of pharmaceutical products in India. The alliance, which sidesteps the conventional mergers and brand acquisition models but offers similar gains, is aimed at pooling expertise and building market presence.
Bayer said that the new Indian JV is a crucial component of its strategy to build a stronger presence in the emerging markets. Dr Jörg Reinhardt, CEO of Bayer HealthCare, explained that the company expects to leverage the strengths of the venture, such as an optimised product portfolio and distribution capabilities, to enhance the launch of new products and the sales of existing brands in India.
Bayer's spokesperson in India told Scrip that the alliance is also part of the company's efforts to reach the €1 billion revenue mark in the country by 2015.
Bayer HealthCare's pharmaceutical division will contribute its existing sales and marketing business in India to the new Mumbai-based company, while Zydus will bring with it its women's healthcare products and diagnostic imaging business, among others. About 600 employees from both Bayer and Zydus are expected to join Bayer Zydus Pharma.
The venture plans to focus on the women's healthcare, metabolic disorder, diagnostic imaging, cardiovascular, diabetes and oncology segments in India. Products such as Glucobay (acarbose), Xarelto (rivaroxaban), Nexavar (sorafenib tosylate) and Yaz/Yasmin (drospirenone and ethinyl estradiol) from Bayer HealthCare, and those that are currently marketed by Zydus Cadila such as Euglim (glimepiride), Progynova (estradiol valerate) and Ultravist (iopromide), will be part of the venture's portfolio.
The new operation also intends to focus on the sales and marketing of future patented pipeline pharmaceutical products, a statement from both partners said. But Bayer's spokesperson declined to comment on whether it expects to address concerns regarding the high price of products such as Nexavar.
Nexavar, which is already a subject of intense litigation in India, recently found itself in the spotlight again after the Indian firm, Natco Pharma, made clear its intent to initiate a procedure seeking a compulsory licence for sorafenib, after Bayer rejected its request for a voluntary licence to make a cut-price version of the product in India.
Significantly, this is the second time that the two companies are attempting to combine forces on such a scale. In 1998, Bayer and Zydus had signed a memorandum of understanding to set up a 51%:49% joint venture healthcare company in India, but later aborted plans after they felt that their mutual interests would be better served by continuing operations independently. Zydus, however, already has an alliance with Schering AG, which was acquired by Bayer some years ago.