The operational integration of Pfizer and Parke-Davis in India is heating up and synergies between the two companies are expected to gain momentum. With a growth of 14 per cent, the annual turnover of Pfizer is Rs 327 crore while the sale of Parke-Davis showed a growth of 12 per cent at Rs 200 crore. The proposed merger would result to create a bigger Pharma entity with strong brands.
Commenting on the proposed merger, R.A.Shah, chairman of Pfizer at its 50th annual general body meeting said that the legal merger would receive "earnest consideration" by the boards of both the companies. Hocine Sidi Said, managing director added "While it is too early to make promises to our financial community yet, the new Pfizer resulting from the merger with Parke Davis India will deliver strong quantitative and qualitative benefits". The overall objective of the merger will be creating greater value for shareholders, employees and customers.
Parke-Davis happens to belong the same group company, Warner Lambert co. USA that has recently merged into Pfizer Inc USA to form a combination which is expected to be the world's largest pharmaceutical companies in 2000 with a production portfolio of 5 of the world's 20 top selling medicines and the industry's largest R & D organisation.
Interestingly, both the companies have competing brands in the cough syrup segment. Pfizer has the unique distinction of being associated with the number one brand Corex in the Rs 500 crore cough syrup segments with over 50,000 brands. Parke-Davis has Benadryl, which was launched in 1957. Both the products are well established in the market. With an annual sales of Rs 71 crore, the Corex accounts for nearly 22 per cent of the total sales. Benadryl with a turnover of Rs 25 crore represents 12.5 per cent of the sales. Cough syrup, which is a prime brand for both the companies command a good price realisation and growth, prospects over the years.
Pfizer has a number of other products including Becosules, Dolonex, Minipress, Terramycin, Magnex, Hepashield and Proteinex. Out of its 30 brands, eight brands are among the top 300 brands. Pfizer's success is the result of dual focus on building new products while maintaining the contribution of large volume brands. Besides, the company has the support of parent company's R & D activity. Besides, the company has a strong sales forces comprising 800 medical representatives. Besides Benadryl, Parke-Davis has established brands like Gelusil MPS, Listerine, Ferradol, Waterburry Compound, Agarol and Neko Soap.
The proposed merger between them would give a further fillip to their brand portfolio in terms of volumes and sales as these are used in different therapeutic segments.
Commenting on Pfizer Inc's proposed wholly owned subsidiary in India, Said quipped that strong business sense will prevail while deciding upon the enactment of the wholly owned subsidiary. "Interests of shareholders, employees and more importantly the long term sustainability of financial performance will be considered while arriving at a conclusion. Pfizer has yet to activate its 100 per cent subsidiary, despite having received FIPB approval over a year ago.
According to Said, the company is open to strategic alliances that can augment the brand equity of its core products. There has been considerable speculation about Pfizer's long-term interest in Shantha Biotechnics. On a query of possibility of picking a stake in Shantha Biotechnics, Said has remarked, "It continues as a strategic alliance." The company has earmarked Rs 14 crore for modernising its plant at Thane and Chandigarh while its search to find a suitable buyer for its Ankleshwar plant continues.