Novartis India announces H1 2014-15 Results; Divests Animal Health Business to Eli Lilly

At a meeting held in Mumbai today, the Board of Directors of Novartis India Limited (the “Board") approved results for the half year ended 30 September 2014. During the period under review, Novartis India Limited (the “Company") recorded Total Income from Operations of Rs 4435 million.

During the half year under review, the core business of the Company, Pharmaceuticals, recorded Total Income from Operations of Rs 3059 million as against Rs 3000 million in the previous corresponding half year. The Company’s Generics business registered Total Income from Operations of Rs 258 million as against Rs 290 million in the previous corresponding period. The Animal Health business registered Total Income  from Operations of Rs 469 million as against Rs 546 million in the previous corresponding period. The OTC business recorded Total Income from Operations of Rs 650 million as against Rs 534 million in the previous comparable half year.

During the half year under review the Company recorded a Loss from Operations of Rs 51 million as compared to Loss from Operations of Rs 98 million during the corresponding period of the previous year. The Company registered Net Profit after Other Income of Rs 284 million as against Rs 594 million in the previous corresponding period.

The Company has filed a Writ Petition on 8 May 2014 before the Hon’ble Oelhi High Court challenging the move of the National Pharmaceuticals Pricing Authority (“NPPA") to include Voveran 50 GE tablets, marketed by the Company under price control in terms of the Drug Price Control Order 2013. The Hon’ble Delhi High Court issued a notice to NPPA on 16 May 2014 directing it to file its response to the Writ Petition filed by the Company.

During the pendency of the Writ Petition, NPPA issued a Show Cause Notice dated 24 September 2014 to the Company alleging over charge on sales of Voveran 50 GE tablets, to which the Company responded. The Company has now received a Demand Notice from NPPA on 31 October 2014 directing that Rs 281.8 million (including interest) be paid by 15 November 2014. This demand is being contested following due process of law.

Transfer of Novartis India Limited’s (the “Company") Animal Health Division
​As part of its global portfolio transformation, Novartis AG, Basel, Switzerland (”Novartis AGA agreed on 22 April 2014 to divest its global Animal Health business to Eli Lilly and Company, USA (“Lilly”). Closing of this global transaction is subject to receipt of all applicable anti-trust and regulatory approvals, as well as the satisfaction or waiver (as applicable) of various other conditions.

In connection with this global transaction, the Board considered on 7 November 2014 the disposal by the Company of its Animal Health Division (the ”Animal Health Division") to Elanco India Private Limited (or another affiliate of Lilly) (the “Animal Health Transaction").

Factors considered by the Board in its consideration of the Animal Health Transaction included, but were not limited to. the prospects for the Company’s Animal Health business in India following the divestment of Novartis AG’s global Animal Health business, including all of Novartis AG's major Animal Health patents, trade-marks and R&D assets; the valuation for the transfer of the Animal Health Division, which has been affirmed in a report provided by an independent valuer and the fairness of which has been confirmed in separate opinions from two leading merchant bankers; and the enhanced ability of the Board, the Company’s management and all retained employees to focus on and drive forward the growth of the Company's retained businesses.