Bayer recasts activities, gets into OTC sector

Mumbai: Bayer India, the Indian subsidiary of the German healthcare and crop sciences major Bayer AG, is restructuring, consolidating and expanding its activities in India.

To begin with, it intends to launch its over-the-counter (OTC) products in India for which it wants to enter into co-marketing alliances and partnerships with Indian companies having expertise in the area. The company has also indicated that it is open to acquiring brands and manufacturing facilities of other companies in order to bring its plans to fruition.

The Bayer group worldwide is also in the midst of restructuring its operations into polymers, crop sciences, healthcare and chemicals, which is expected to be over by the middle of 2003.

Bayer group CMD Dieter Kambeck, while outlining Bayer's plans in India, says his company has chalked out plans for its OTC business, including bringing its internationally successful brands to India. "Aspirin is our oldest and most successful brand and we need to bring it to India for both image and brand reasons."

The names of the local companies with whom Bayer is negotiating for co-marketing alliances will not be revealed at present as talks are in the initial stages. Company officials say a consultant has been hired to study the Indian OTC market. OTC products account for nearly 30 per cent of the total Rs 16,000-crore pharmaceutical industry in India.

Bayer Diagnostics India managing director Praveen Singh says the company is all set to consolidate its diagnostics, pharmaceuticals, consumer-care and animal health businesses in India — in an effort to bring in operational efficiency and to synergise manpower.

He says the thinking of the group on the pharmaceutical side of the business is one of cautious optimism. The entire strategy of the company revolves around two issues — patent protection and price control.

Some of the products, part of the erstwhile consumer care division, have been brought under the pharmaceutical division. For this business, the company has identified two core areas — anti-diabetes and cardiovascular, with special focus on the former as it has synergy with the diagnostics business.

Kambeck says the company will finalise its new strategy for pharmaceuticals by the last quarter of 2002. And Praveen says globally, the different businesses are wholly-owned subsidiaries and will be merged to become divisions under a single company by early next year.

He adds that this could not be done in India as the parent company's equity participation differs in the different businesses. For instance, while Bayer Pharmaceuticals Pvt Ltd is a wholly-owned subsidiary, having come into being in July 2000, Bayer's diagnostics business has a 51-per cent equity participation by the German parent.

According to a senior company official, after the global restructuring is over Bayer is planning to set up a research and development (R&D) base in India on the lines of GE and IBM for global outsourcing. The company feels that India not only offers a huge talent pool but also offers huge cost advantage over other countries in research.

He further adds that Bayer India is putting up a proposal to the parent company, at a meeting scheduled next month, to step up the R&D activity in India at present, including venturing into clinical trials. This proposal will also recommend a strategy for Bayer's healthcare business, which is not doing too well in India.

The company plans to enhance its R&D spend from the current level of around 0.7 per cent of its turnover of about Rs 700 crore in 2001, say company officials. In the agro chemical segment, Bayer is firming up its plans to venture into the transgenic seeds segment. But in the current year, the high growth rate of 28.73 per cent clocked in 2001 is unlikely to be met due to the delayed monsoons.

As part of the restructuring, the group has announced a global downsizing initiative to cut 4,700 jobs worldwide by 2005. Kambeck says it is too early to comment on the impact of the initiative in India, but avers that none of the production facilities in the country will be shut down.

The Bayer group has 1,12,000 employees worldwide and an estimated 2,700 employees in India. Bayer has eight local production centres in the country.