>Novartis (HEM SECURITIES)

COMPANY OVERVIEW
Novartis India Limited is a leading provider of innovative solutions to improve health and well-being through activities to manufacturing and marketing of products & services in the areas of pharmaceuticals, over-the-counter (OTC) products, nutrition, eye care and animal health. The Company is a subsidiary of the Swiss giant Novartis AG, which is world’s second largest pharmaceutical company.

The company Business activities comprises of pharmaceuticals, generic and OTC drugs in the therapeutic areas of immunology and transplantation, oncology, gynaecology, central nervous system, respiratory, pain and inflammation, ophthalmics and orthopaedics; animal health in the areas of poultry, cattle and pets.; and has a presence in medical nutrition. The company product portfolio consists of key brands such as Sandimmun, Neoral®, and Visudyne in pharmaceuticals with new introductions like Benace®, Tegrital®, and Zaditen®, and holds leadership positions in Voveran®, Methergin®, Syntocinon® and Sandimmun Neoral®.

In generics category the focus of the company is to reduce the TB trade business and sustained in gynecology. The OTC business revolved around the vitamins, minerals and supplements category of products. Key brands include Otrivin®, a nasal decongestant and the T-minic® range of products in the segment of cough, cold and allergy. The new products and line extensions introduced in FY07 included Calcium Sandoz® Suspension, Calcium Sandoz® Woman Mix Fruit, Otrinoz™ and Benefiberm®. Spearheading growth in the animal health business were flagship brands of Tiamutin, Calborol™, Mifexm® and Mifex Oral® with Chelated Milmor Forte® being a new product. The company manufacturing facilities are located at hane, Kalwe, Turbhe and Mahad in Maharashtra.

Recommendation
Novartis India Limited has registered a continuous growth rate over past few years when most of the company’s competitor has registered a decline in revenue. The company is trading at a PE of around 10.3x. We expect the company to be de-listed in the future which could result in a high share premium for minority share holder and we reiterate “BUY” on the stock.

Highlights/Recent Updates
Novartis AG offers to buy more 39 per cent stake in Novartis India at INR 351 per Share
Novartis AG has offered to raise the stake in Novartis India Limited to nearly 90 per cent from the current level of 50.93 per cent. The offer is expected to open in May 2009.

Novartis gets USD 486 Million contract for build flu vaccine manufacturing facility in USA
Novartis announced that the US Department of Health and Human Services, Biomedical Advanced Research and Development Authority has awarded Novartis Vaccines a contract for up to USD 486 million over eight years to support the design, construction, validation, and licensing of US cellbased influenza vaccine manufacturing facilities to provide a prepandemic supply of influenza vaccine.

Novartis collaborates with USV to market Galvus in India
Novartis has collaborated with healthcare company USV to market its anti-diabetic product Galvus, in a move that would pitch the pharma company directly against Merck. Novartis plans to pitch this against Merck’s Januvia by pricing it lower in the Indian anti-diabetic market which saw total sales of INR 16.72 billion till June 2008.

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