Mumbai: German drugs and chemicals firm Merck KGaA will invest one-fifth of the current revenue of its Indian subsidiaries over the next two to three years in an attempt to increase revenue from these companies to €500 million (Rs3,280 crore) by 2013, said Karl-Ludwig Kley, chairman of the executive board of the company who is currently visiting India.
The company operates in India through wholly owned subsidiary Merck Specialities Pvt. Ltd and Merck Ltd, which is listed on the stock exchanges.
Merck Ltd ended 2007 with a revenue of Rs314 crore. Although Merck Specialities is privately held and doesn’t disclose its revenue, the aggregate revenue of Merck KGaA’s Indian arms in the first half of this year was around €150 million.
Plans for India: Karl-Ludwig Kley, chairman of the Merck KGaA executive board, says India is on the firm’s global development map and there will be more products coming the country for development studies. Ashesh Shah / Mint
The planned investments will go towards expanding production, infrastructure, and research and development infrastructure.
The Indian business currently has two research centres in Navi Mumbai, Maharashtra, and Goa, and will set up a third in a location that is yet to be finalized.
Kley added that the company would also look to acquire “technologies and brands” to expand its presence in India, with investments for “such acquisitions...coming in addition to the already planned ones.”
“India is in our key focus now as it is the case with Japan and China,” he said in an interview.
Merck’s investment in India is in line with its new three-pronged strategy to drive global growth: continued innovation; a focus on biotechnology; and an emphasis on speciality product research in selected therapeutic areas for both the pharmaceuticals and consumer health business. The company will follow the same growth strategy in its chemicals business.
“Asian markets such as China, Japan and India will see key activities in this growth strategy,” Kley said.
Last week, Merck inaugurated its third export-oriented unit, or EOU, in Goa to cater to the global market. The new EOU, the first of its kind outside Germany, will manufacture dehydrated culture media, a laboratory chemical with wide applications in pathological and food testing labs. The company has another manufacturing plant in Goa catering largely to the local drug market.
Last year, Merck had launched its global development programme in India with human trials of its therapeutic lung cancer vaccine Stimuvax. “Now India is on our global development map and there will be more products coming to India for development studies,” Kley said. “Our new launches from the global pipeline will be mainly patent protected speciality products, which will include innovative biotechnology products.”
Earlier this year, Merck Ltd had said it would launch at least a dozen new products from its domestic development pipeline which are specific to the local market.
Merck KGaA had launched its colorectal cancer drug Erbitux in India through Merck Specialities in 2006.
“We will launch our global products in India through the listed entity as well as the 100% subsidiary depending on the nature of the product,” said Kley.
He clarified that US biotech company Eli Lilly and Co.’s move last week to buy Merck’s long-time partner ImClone Systems Inc., which makes Erbitux, will not impact its licensing deal to sell the drug outside the US.