Novartis Pharma Exits from Pakistan – Asrar Qureshi’s Blog Post 1183

Novartis Pharma Exits from Pakistan – Asrar Qureshi’s Blog Post 1183

Dear Colleagues! This is Asrar Qureshi’s Blog Post 1183 for Pharma Veterans. Pharma Veterans Blogs are published by Asrar Qureshi on its dedicated site https://pharmaveterans.com. Please email to pharmaveterans2017@gmail.com  for publishing your contributions here.

Preamble

This blog post summarizes the facts around the transaction, analyzing likely benefits and risks, and offering practical takeaways.

Novartis Pakistan sold to IIL (Getz Group affiliate): what it means for the industry, patients and policy

In May 2025 Novartis announced an agreement for its Pakistan business to be transferred to International Investment II Limited (IIL), an investment holding company affiliated with Muller & Phipps and part of the Getz Group, and in November 2025 Pakistan’s Competition Commission (CCP) completed a Phase-I review and authorized the transaction. The deal transfers control of Novartis Pharma (Pakistan) Limited from Novartis AG/Novartis Pharma AG to IIL, while the legal entity continuing manufacturing and distribution remains the same.

This change of ownership is significant for Pakistan’s pharmaceutical ecosystem. Novartis has been a major multinational presence in the country for decades, manufacturing, marketing and supplying innovative and essential medicines across several therapeutic areas. The buyer, IIL (a Hong Kong incorporated vehicle linked to long-established regional distributors), is a locally experienced investor and operator rather than a global R&D drug company. That fact shapes both opportunity and risk.

What we know (brief factual snapshot)

• Agreement announced: Novartis publicly disclosed (8 May 2025) an agreement with International Investment II Limited (affiliated with Muller & Phipps Pakistan and part of the Getz Group) for the transfer of its Pakistan business. The statement emphasised continuity of supply and that manufacturing and distribution would continue under the existing legal entity.

• Regulatory clearance: The Competition Commission of Pakistan (CCP) completed a Phase-I competition assessment and authorised the acquisition in November 2025, enabling the transfer of control under the Share Purchase Agreement. The CCP clearance suggests the merger was not judged to raise immediate market-dominance or anti-competitive concerns at Phase-I.

• Buyer profile: IIL is an investment holding company incorporated in Hong Kong and associated with long-standing regional commercial houses (Muller & Phipps, Getz Group) that have deep distribution, trade and commercial experience in South Asia and the Middle East.

Why Novartis is selling and why the buyer fits

Multinationals routinely reshape their footprint to align with corporate strategy: portfolio rationalization, focus on core R&D assets, regional commercial partnerships, tax and regulatory environments and optimization of manufacturing footprints. Novartis’ decision fits a broader industry pattern where global pharma exits or reduces direct ownership in some local markets and instead entrusts operations to reputable regional partners or licensees. The buyer, a distribution and trading group with local market expertise, is attractive because it can prioritize market access, local regulatory navigation and supply continuity.

Potential benefits (the upside)

Continuity of supply and local manufacturing preserved: Novartis’ statement and subsequent regulatory filings indicate the legal entity, manufacturing operations and distribution channels will continue, meaning patients and hospitals should see minimal disruption in the near term. Local manufacturing capacity being kept intact matters for supply security and jobs.

Local management focus and agility: A locally-rooted acquirer like IIL/Muller & Phipps may be nimbler in responding to market dynamics in Pakistan, pricing pressures, procurement cycles, hospital tendering and government procurement. That local commercial focus can preserve or even grow product availability and local market penetration.

Potential for reinvestment and expansion: Regional trading houses that buy local affiliates often bring commercial ambition: investment in marketing, sales force expansion, supply-chain optimization and possibly further localization of production or registration of additional products. Over time this can translate into more consistent product availability and better market servicing.

Regulatory reassurance through CCP approval: The CCP’s Phase-I authorization reduces the short-term risk of regulatory roadblocks. The authorities signaled the deal did not trigger immediate competitive harm, a helpful signal for customers and suppliers.

Preservation of market channels and relationships: IIL’s local networks and knowledge may maintain strong relationships with public procurement agencies, hospitals and private distributors — important given Pakistan’s mixed public–private healthcare financing and procurement mechanisms.

Potential risks and downsides (what to watch for)

Innovation pipeline and access to patented medicines: A non-innovator acquirer typically lacks the ability (or incentive) to continue launching high-cost patented therapies that a company like Novartis would bring. While the press release stresses continued supply, in the medium term there is a risk that access pathways for the latest patented or niche therapies could narrow unless specific licensing or supply agreements are put in place with originator companies.

Price and formulary dynamics: A commercially focused regional owner may prioritize profitability in low-margin markets, which could cause re-pricing, rationalization of low-volume products, or withdrawal of non-profitable lines. That is not inevitable; it depends on the acquirer’s strategy, but it is a common outcome of such deals.

Employment and corporate culture shifts: While short-term job continuity is likely, medium-term restructuring, cost rationalization or integration of corporate functions could lead to workforce changes. The impact on specialized technical staff and R&D/QA functions needs monitoring.

Perception and investor sentiment: When a global innovator exits direct ownership of a local affiliate, it can be perceived as retreat, affecting sector sentiment. Some stakeholders worry this signals lower long-term investment into local health sectors by international pharmaceutical companies.

Sum Up

The transfer of Novartis Pakistan to International Investment II Limited is a major commercial development in Pakistan’s pharmaceuticals sector, neither an unalloyed threat nor a guaranteed boon. In the short term, continuity seems assured (same legal entity, which is the most important outcome for patients and health services. Over the medium term the deal’s net public value will depend on how the new owner balances commercial returns with commitments to access, pharmacovigilance, local reinvestment and quality.

Policymakers should treat such transactions as strategic moments: use them to lock in supply guarantees, strengthen local regulatory capability, and leverage the transition to secure more local value (jobs, manufacturing, training). For the buyer, good governance, credible safety systems and visible investment will be the fastest route to legitimacy and commercial success in a challenging market.

Concluded.

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