Bayer had, in July last, signed a memorandum of understanding (MoU) to set up a 51:49 joint venture healthcare company in the country under which Bayer India was to transfer its existing pharma brands and marketing operations.

The cumulative investment for setting up the new venture was roughly Rs 20 crore while the initial equity capital stood at Rs 16.2 crore.

Friday's statement came even after both parties had categorically denied chances of a break up in their separate faxed responses to The Financial Express on March 23. Subsequently, on April 9, Bayer had stated that both parties were "fine-tuning the strategies to be adopted for a successful entry of the new company in the Indian market and that the draft contract was under discussion".

In a joint release issued on Friday, both partners said afterintensive discussions, Bayer and Zydus came to the conclusion that their mutual interests would be better served by not entering into a pharma-marketing joint venture. "Other options for co-operation are under evaluation. Both groups are continuing to explore possibilities for co-operation in the life-sciences segment," it added. Zydus group managing director, Pankaj R Patel told The Financial Express that both partners could explore co-marketing, sourcing or even joint product development options subsequently.

He said the joint venture with Bayer had been called off as it did not make business sense. "As partners in growth, we have had intensive discussions on the future and the growth of the JV, and have come to the conclusion that our mutual interests will be better served by continuing our operations independently," he added.

Significantly, it is now unclear whether Bayer will rope in another partner or simply retain its pharmaceutical business in the 51 per cent subsidiary, Bayer India.

In May1998, Bayer had said it was restructuring its pharmaceuticals business to "assure a non-loss situation" for its shareholders. The exercise had, at that time, laid down plans to "discontinue all future investments in pharmaceutical sales and marketing".

The German multinational had then said it would set up a new joint venture entity to undertake sales and marketing of all 13 pharma brands (including Resochin, anti-fungal Canesten and Baycort) originally handled by Bayer India. The joint venture company was also to take on Bayer India's 220-and-odd pharma marketing personnel. The domestic pharmaceuticals business accounted for roughly Rs 40-45 crore of Bayer India's turnover, though the trademarks for all brands is held by the German parent.

Subsequently, Bayer had appointed Coopers & Lybrand to undertake the valuation for the transfer of the marketing and the distribution network to the joint venture. The German giant had been working on a possible compensation that may be payable to the Indian arm forthe transfer of intangibles to the joint venture, allegedly due to institutional pressure.

No official confirmation could, however, be got.

Zydus to transfer Mumbai unit assets to venture

The Ahmedabad-based Zydus group is transferring the assets at its facility in Mumbai (the Indon unit) to its joint venture with Byk Gulden of Germany. Zydus group managing director, Pankaj R Patel said details on the consideration were being worked out. The Indon facility had been shut following a successful VRS there. Meanwhile, Byk Gulden is expected to shortly finalise plans to source its entire global requirements for lonazolac calcium (used in an anti-arthritis drug) from the Zydus group. These requirements are valued at roughly $5 million. The local partner is also expected to undertake phase one and phase two clinical trials for a new chemical entity for Byk Gulden in India once the drug moves up the development cycle.