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FIPB grants Pfizer more time to set up wholly-owned arm

Ambarish Mukherjee

NEW DELHI, April 4

THE US-based Pfizer Corporation has been granted a one-year extension by the Foreign Investment Promotion Board (FIPB) for setting up a wholly-owned subsidiary in India, namely — Pfizer Corporation Private Ltd.

The subsidiary will organise clinical research activities in respect of new molecules as well as manufacturing bulk drugs and formulations such as Sulbactum, Ampicilin, Flucanazole and Tinidazole, conducting market research and market testing and will also explore sourcing and export of Indian bulk drugs.

The company will have an equity capital of $1 million to be infused by the US parent before the one-year extension period ends on December 23.

Pfizer already has a significant presence in the Indian market through its listed outfit Pfizer Ltd. Currently, 40 per cent stake in Pfizer Ltd is held by its US parent, while 33.23 per cent by mutual funds and the UTI and 22.44 per cent rests with the public. The remaining is distributed among others.

The formation of the wholly-owned subsidiary is being seen as the first concrete step towards consolidation of the company's Indian business.

The proposed arm has already been registered with the Registrar of Companies, Maharashtra, but the validity of the company's foreign collaboration agreement had expired in December 2001. Following the extension granted by the FIPB, the US pharmaceutical major will now go ahead and incorporate the company with a capital base of $1 million.

According to the company, the delay in forming the subsidiary is because when the company had sought approval for setting up a wholly-owned subsidiary for the first time in 1999, the original foreign collaboration approval given by the FIPB through its letter dated December 23, 1999, did not permit the company to undertake all the activities requested in the company's proposal.

The company then again approached the FIPB in January 2001 for amendments, which were finally approved in October 2001 following which the company initiated the process of preparing a detailed business plan of the proposed project.

Pfizer Ltd recorded a total income of Rs 423.53 crore for the year ending November 2001 and during the first quarter of the current accounting year ended February 2002, the company posted a net profit of Rs 12.04 crore on a total income of Rs 101.3 crore.

Pfizer Ltd also has a wholly-owned subsidiary in India, namely Duchem Ltd. The company also has a co-marketing agreement with the Hyderabad-based Shantha Biotech under which the vaccine Hepashield is marketed by Pfizer. Following the global merger of Pfizer and Warner Lambert, Lambert's Indian subsidiary Parke-Davis will be merged with Pfizer Ltd according to indications available. The company has said that it will try to implement a legal merger by the year-end.

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