Novartis India transfers sales and distribution to Dr Reddy’s Labs, to axe 400 employees

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Switzerland-headquartered global healthcare giant Novartis’s Indian arm Novartis India (NIL) on February 11 announced that it has entered into an exclusive sales and distribution agreement with the Indian generic drug maker Dr Reddy’s Laboratories for a few of its established medicines.

In a statement, NIL said the medicines to be transferred to the Hyderabad-headquartered Dr Reddy’s Laboratories on an exclusive basis for sales and distribution include the Voveran range, the Calcium range and Methergine.

However, Novartis AG will retain Trademark ownership of these medicines.

Novartis said the arrangement aims to further broaden access to these medicines beyond the current geographies to benefit many more patients.

“This brings together the manufacturing and development synergies of NIL with the sales and distribution strengths of Dr Reddy’s,” said Novartis, adding that “this strategic business decision is leading to the separation of approximately 400 employees of NIL due to role redundancies.”

Novartis said it is “doing our best to support them” and that it is “extending a severance package along with outplacement services.”

Interestingly, Novartis, which hired over 1,600 employees across divisions and companies in India since January 2020, said it is “planning to continue this hiring program in 2022.” In all, Novartis now has a large footprint in India with over 10,000 full-time employees.

Novartis India’s country president and managing director Sanjay Murdeshwar said the company entered into this strategic business arrangement with Dr Reddy’s by keeping the patient interest at the centre and “to extend access to our Established Medicines to benefit more patients in India efficiently.”

On India investments, Novartis said it had spent over $300 million over the last five years in creating an R&D support centre and services in India. The Swiss healthcare giant is in the process of expanding further by setting up an additional manufacturing plant at Kalwe involving an investment of approximately $49 million. This plant would manufacture oral cancer medicines for the global market.

In a separate statement late on February 11, Dr Reddy’s Laboratories said the arrangement with Novartis India will strengthen its portfolio in the pain management and women’s health areas. “It is our endeavour to build on the legacy created by NIL over the years and we intend to evaluate capabilities to maintain business continuity,” said MV Ramana, chief executive of Dr Reddy’s for Branded Markets (India & Emerging Markets).