Remittances by multinational drug companies from India to their parent companies are steadily rising since last three years. The foreign exchange outgo as dividend payouts by these companies to their parents have gone up by 89 per cent during the year ended 2004.

A Pharmabiz study of 10 top MNCs has shown that total dividend paid by them during 2004 have gone up by 97 per cent at Rs 376.21 crore from Rs 191.57 crore in the previous year.

The companies are Abbott India, AstraZeneca Pharma India, Aventis Pharma, Fulford (India), GSK Pharmaceuticals, Merck Ltd, Novartis India, Pfizer Ltd, Solvay Pharma India and Wyeth Ltd.

With the significant equity stake by the foreign holding companies, the total dividend amount remitted by these companies to their parents went up by 89.3 per cent to Rs 189.73 crore in 2004 from Rs 100.29 crore in the year 2003 and Rs 78.56 crore in the 2002.

Among the ten pharma MNCs, GSK has the largest equity capital base of Rs 87.32 crore and its UK-based holding company has an equity stake of 49.15 per cent. The company paid equity dividend of 240 per cent for the year 2004 as compared to 100 per cent in the preceding year. Its total dividend amount worked out to Rs 209.57 crore during 2004, a sharp growth of 181 per cent. Out of the total dividend amount, the company paid dividend amount worth Rs 103 crore to its holding company in UK.

AstraZeneca Pharma India's foreign holding company AstraZeneca Plc, UK has stepped up total equity stake to 90.39 per cent through buy-back offers from Indian investors. The company declared hefty dividend of 500 per cent for the year December 2004 as compared to 39 per cent in the last year. The dividend of 500 per cent includes a special silver jubilee dividend of 458 per cent. Its total dividend amount for the year ended December 2004 worked out to Rs 25 crore as compared to Rs 1.95 crore in the last year. With the 90.39 per cent holding by foreign holding company, the dividend remitted worked out to Rs 22.98 crore as compared to just Rs 1.79 crore in the last year.

Pfizer Ltd has increased its dividend remittance amount to Rs 11.52 crore during the year ended December 2004 from Rs 8.64 crore in the last two years. Pfizer Inc, USA is holding 40 per cent equity stake in the Indian arm. The Indian company stepped up equity dividend from 75 per cent to 100 per cent in 2004.

Aventis Pharma has maintained the equity dividend at 160 per cent for the year December 2004, which absorbed an amount of Rs 36.90 crore. The company paid an amount of Rs 18.46 crore to its holding company. Similarly, Abbott India, maintained the equity dividend rate at 350 per cent during 2004. Abbott Laboratories, USA, through its subsidiaries is holding 61.7 per cent equity capital in Indian partner.

Novartis India has an equity capital base of Rs 15.98 crore at the end of March 2004 with foreign holding of 50.93 per cent by Novartis AG, Basle and its subsidiaries. The company stepped up equity dividend to 200 per cent from 150 per cent in 2002-'03. The total equity dividend amount worked out to Rs 32 crore of which the company paid Rs 16.27 crore to its foreign holding company. Wyeth Ltd also pushed its dividend to 100 per cent from 60 per cent and remitted an amount of Rs 6.97 crore to its 51.12 per cent holding company Wyeth, USA.

Thus, the pharma MNCs are stepping up dividend remittances year after year and the trend is likely to continue in the coming years also. With the continuing policy of liberalization, the cash rich MNCs are likely to increase their equity holdings in the Indian counterparts. Recently, GSK announced buy-back of shares at a price of Rs 800 per share. The company is planning to buy back additional 25 per cent shares from this offer. The buy back offer is expected to enhance the earnings per share of the company and the return on capital employed.

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