Yet another global drug industry merger will soon impact the Indian pharmaceuticals industry. Only, we shall have to wait a bit to see the exact shape of the merger.

On 3 November 1999 American Home Products and Warner Lambert Company announced a merger to form the world's biggest drug company with combined annual sales of $26 billion. But, on 5 November, before they could go any further on this plan, Pfizer Inc made a counter-bid offer to acquire Warner Lambert. Pfizer's offer is $96.4 per Warner Lambert share, against the value of $83.26 per share proposed by AHP. So what happens in India if AHP and Warner Lambert merge? And what if Pfizer acquires Warner Lambert?

If Wyeth Lederle India Ltd and Parke Davis India Ltd, the Indian subsidiaries of AHP and Warner Lambert, decide to merge, they will create the fifth largest drug company in India in terms of domestic sales. This may well happen, considering that the Warner Lambert management has rejected Pfizer's bid.

Wyeth Lederle is a 51 per cent subsidiary of American Home Products. Warner Lambert holds 40 per cent of Parke Davis's equity.

IMS Health 1998 audit data for India (Jan to Dec) ranks Lederle 14^th in terms of domestic sales in India, with estimated sales of Rs 228.7 crore. Parke Davis ranked 24^th in 1998, with sales of Rs 165.9 crore. With combined sales of Rs 395 crore, a merger of these two companies would catapult them jointly to the fifth position behind Glaxo Wellcome, Ranbaxy, Cipla and Hoechst Marion Roussel. Together, the two companies would hold slightly more than 3 per cent of the Indian pharmaceutical market.

If Pfizer wins, the marriage of Indian subsidiaries Pfizer India and Parke Davis would result in the formation of the fourth largest Indian drug company in terms of domestic sales. Pfizer holds 40 per cent of the Pfizer India's equity.

IMS Health 1998 audited data estimated Pfizer sales at Rs 287.3 crore Parke Davis's sales at Rs 165.9 crore. If they merge, their combined sales would be Rs 453 crore.

Officials of both Indian companies are tight-lipped about the impact of the proposed international merger on domestic operations. But a senior Wyeth Lederle official said the merger of Indian subsidiaries would be good for both companies. "Both companies have promising products that are yet to be launched in India. Some of them have the potential to achieve blockbuster status in Indian markets too," the official says.

The two companies complement each other in terms of the therapeutic classes of their products. Wyeth Lederle has a strong presence in plain corticosteroids, broad spectrum penicillins, tetracyclines, antacids and antiflatulents, and hormonal contraceptives. Parke Davis's portfolio comprises cough and cold preparations, cardiovasculars, neurological products, drugs for gynaecological care and paediatric preparations.

The therapeutic classes of Pfizer and Parke Davis too complement each other. Pfizer's main therapeutic segments in terms of sales are vitamin B complex, cough sedatives, tetracycline combinations, antirheumatic non-steroidals, protein supplements and cardiovasculars.