A couple of days after Novartis India Ltd agreed to acquire Pfizer Inc’s trademarks for ‘Minipress’ and ‘Minipres’ in India, the development has had the opposite impact on their respective stocks.
NIL’s stock prices ended up 20 per cent at ₹2,188 on the BSE on Wednesday amid optimism involving the drug used to treat hypertension and manage urinary symptoms of benign prostatic hyperplasia (BPH). Pfizer’s stock, however, ended the day down 3.3 per cent at ₹4,171.35 on the BSE.
The two companies had announced on Monday that NIL had inked an agreement with Pfizer Inc to acquire the trademarks for India, besides certain related intellectual property rights, for ₹1,250 crore. NIL is owned by private-equity firm ChrysCapital, after it acquired the entire 70.68 per cent stake in the company that was previously held by the Swiss parent company Novartis AG.
A note from the Systematix Group pointed out that Pfizer India would receive only ₹132 crore, as the trademark or brand ownership was with the parent. The divestment could impact Pfizer’s net earnings, it noted. The report expected a decline in annual EBITDA by approximately ₹60 crore, translating to about 4-5 per cent adverse impact on EPS.
For NIL, the Minipress acquisition gives a mass-market presence that can be leveraged to build on other mass-market brands, the report said. “Novartis will need to borrow to fund this transaction and hence the transaction may be accretive from only year 2 (two),” the report added. The inorganic route helps build market presence, the report said, adding that NIL could leverage its nephrologist connect to meaningfully expand the Minipress XL franchise.