Novartis AG, the Swiss pharmaceutical company, has begun a strategic review of its domestic arm —Novartis India Ltd.

Hyderabad-based Dr Reddy’s Laboratories has reportedly expressed interest in acquiring the Novartis parent’s stake, which is valued at nearly Rs 1,805 crore at the current market price.

The Basel, Switzerland-based company on Friday said the strategic review will include an assessment of the 70.68 per cent shareholding of Novartis AG in Novartis India.

It, however, clarified that the review will not affect its other wholly-owned subsidiary — Novartis Healthcare.

Novartis Healthcare includes the Novartis Corporate Centre in Hyderabad, the commercial arm of Novartis in India and the R&D teams, which currently conduct clinical trials at more than 300 trial sites in the country.

The company, however, added that there is no assurance that the strategic review of Novartis India Limited will be completed in 2024, or that the outcome would result in the implementation of any transaction.

Novartis employs more than 8,100 associates in India and it says it remains deeply committed to the country with a footprint that has expanded significantly in recent years.

However, a CNBC TV-18 report said that Dr Reddy’s is in the race to acquire Novartis AG’s stake in Novartis India. The company is keen to acquire the domestic-focused portfolio and may offer a controlling premium for the purchase.

In 2022, the two companies had entered into an exclusive sales and distribution agreement under which Dr Reddy’s had rights to distribute the Voveran, Calcium and Methergine lines in India. The tie-up had then led to the separation of around 400 Novartis India employees due to role redundancies.

In its Annual Report for 2022-23, Novartis India had said that the idea behind the arrangement with Dr Reddy’s was to broaden access to these medicines beyond the current geographies to benefit many more patients and that the new commercial model had helped the company reach more healthcare professionals and patients, thereby yielding positive results.

For the quarter ended December 31, the company had posted revenues of Rs 84.54 crore compared with Rs 80.17 crore in the corresponding period of the previous year.

Profit after tax stood at Rs 26.6 crore against Rs 7.6 crore in the year-ago period. For the year ended March 31, 2023, Novartis had clocked revenues of Rs 3,787 crore and net profit of nearly Rs 1034 crore.