The spurt in prices has sent the market cap zooming in the past three days. Glaxo's market cap has zoomed by Rs 1,000 crore as a result of the scrip moving up from Rs 690 to Rs 857 on the Bombay Stock Exchange (BSE). On Wednesday, the scrip, after touching a high of Rs 859, closed marginally lower at Rs 857. The market cap has crossed the Rs 50,000-crore mark and stood at Rs 51,000 crore on Wednesday.Novartis' rise from Rs 882 to Rs 1019 has resulted in its market capitalisation zooming by Rs 437 crore to Rs 32,470 crore. The scrip, however, closed marginally lower at Rs 988. Market capitalisation of Pfizer, Smithkline Pharma and Hoechst Marion, too, has improved by Rs 288 crore, 241 crore and Rs 214 crore, respectively. Apart from allowing an automatic approval for a 74 per cent stake, a weighted deduction of 125 per cent of the expenditure for reserearh and development has been proposed. The R&D benefit augurs well for domestic pharma companies like Ranbaxy, Wockhardt and Dr Reddy who have been spending a lot in the field of research and development.

The MNC pharma companies like Smithkline Beecham Pharma, E Merck, Fulford, Knoll Pharmaceuticals, Novartis, Pfizer and Rhone Poulenc could be a few MNC pharmaceutical companies where the parents would be interested in hiking their stake. The current promoter stake in most of these Indian companies is in the range of 40 per cent to 51 per cent. The mostfavcourable cases will be the ones where the foreign promoters are holding an equity stake of less than 51 per cent. These promoters will certainly be keen to take their holding to a majority level if not 74 per cent.

Knoll Pharmaceuticals' foreign promoter, Lupharma GmBH, is currently holding a 51 per cent stake in the company's equity of Rs 16.2 crore. Schering Group is holding a 40 per cent stake in its Indian subsidiary, Fulford India's small equity of 3.2 crore. Pfizer, too, is holding 40 per cent in Pfizer India's equity of 11.72 crore. Another interesting case could be that of Novartis. Ciba Geigy Plc is holding a 40 per cent stake in the company's equity of Rs 31.86 crore.

There has already been a lot of speculation about many of these promoters willing to hike their stake close to or beyond the majority level. Fulford, for instance, was on rise a few months back on speculation that the parent, Schering Plough, US, is hiking its take from 40 per cent to 51 per cent. A few months ago,Warner-Lambert, (WL), the $ 8 billion US pharma giant, which owns 40 per cent in Parke-Davis was also being rumoured to be interested in hiking the stake in its Indian subsidiary. With the automatic approval now being granted, it could be just a matter of time before companies like Warner-Lambert go ahead and hike the stake in the Indian subsidiaries.

WL is one of the two American firms yet to effect a hike in stake in its Indian arm. Pfizer Inc, the other firm, has 40 per cent holding in Pfizer India. Other pharma majors like Abbot Labs of US and Knoll AG of Germany have already stepped up their stake to 51 per cent in their local companies last year.