War over alliance

Published: Tuesday 30 November 1993

-- Multinational pharmaceutical companies Hoechst and Gist Brocades (GB) have locked horns, through their Indian representatives Ranbaxy and Max India, over a proposed joint venture with the public sector company, Hindustan Antibiotics Ltd (HAL), on penicillin-G, which is widely used for making semi-synthetic penicillin (SSP) intermediates. GB is the world leader in penicillin-G production, and a tie-up with it could make HAL the second largest producer in the world. However, Hoechst, whose penicillin-G output is one-fourth that of GB, is giving GB a run for its money by claiming to have superior technology.

The venture is expected to step up HAL's annual penicillin-G output from the present 850 mega-million units (MMU) to 1,400 MMU within a year. This is expected to rise to 2,000 MMU the next year. The race for a tie-up with HAL comes at a time when globally, the prices of Penicillin-G intermediates has fallen by 60 per cent, while the output has increased by 30 per cent forcing smaller companies out of the field and prompting leading drug manufacturers to opt for substitutes.

However, nearer home, the scenario is different. About 13 per cent of the world's penicillin-G output is sold in India. If HAL steps up production to 2,000 MMU a year, it would mean a two-thirds reduction in imports and a saving of approximately $240 million in foreign exchange over 10 years.

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