Why is Novartis selling its listed India commercial arm?

Swiss drugmaker Novartis AG has signed an agreement with private equity firm ChrysCapital to transfer its 70.68% shareholding in Novartis India Limited (NIL), marking its exit from the listed Indian entity following a strategic review initiated in February 2024.

Novartis AG informed the board of NIL of its decision after signing the agreement with ChrysCapital on Thursday. NIL is listed on BSE Limited and operates as an independent public company.

Under Securities and Exchange Board of India (SEBI) takeover regulations, the acquisition of a controlling stake in a listed company triggers a mandatory open offer to public shareholders. Accordingly, the ChrysCapital-led consortium will offer to acquire up to 26% from minority shareholders, giving them an opportunity to tender their holdings as part of the change in control.

The transaction values Novartis India Limited at about ₹1,445.89 crore for the 70.68% stake being acquired from Novartis AG, according to disclosures filed with the exchanges. In addition, the incoming investors have launched a mandatory open offer to buy up to 26% from public shareholders at ₹860.64 per share, which could entail a further outlay of up to ₹552.49 crore if fully subscribed.

The divestment forms part of Novartis AG’s strategy to focus exclusively on innovative medicines and simplify its global structure.

According to Novartis India Limited’s Annual Report for FY2024–25, the company reported revenue from operations of ₹356.27 crore and total income of ₹398.23 crore for the year ended March 31, 2025. Profit after tax stood at ₹100.90 crore, reflecting continued profitability at the listed entity even as the parent company proceeds with its divestment.

Innovation operations continue

Novartis clarified that the stake sale will not affect the operations of Novartis Healthcare Private Limited (NHPL), its wholly owned subsidiary in India. NHPL houses the company’s commercial operations in India, its Novartis Corporate Center in Hyderabad, and its research and development teams, with clinical trials conducted across more than 300 sites in the country.

Novartis stated that it will continue expanding its innovative Cardio-Renal-Metabolic and Oncology portfolio in India, aligned with its global strategy. NIL and NHPL operate as separate legal entities, and the transaction does not affect NHPL’s business or workforce, the company said in a statement.

The Rationale

ChrysCapital is among India’s largest private equity investors and has previously invested across the healthcare, pharmaceuticals, and financial services sectors. The acquisition of a controlling stake in NIL signals continued investor interest in established branded generics and legacy pharmaceutical portfolios in India.

Salil Kallianpur, a healthcare industry commentator, said the transaction reflects a broader shift in how multinational pharmaceutical companies are positioning their India operations. “This is not Novartis exiting India. It is exiting a listed commercial trading entity,” he said.

According to Kallianpur, global innovator pharma companies are reassessing capital allocation priorities. “Global innovator pharma companies are re-optimising capital allocation. The return on equity of a mid-sized Indian commercial subsidiary is not compelling compared to investing in innovation pipelines,” he said.

From the acquirer’s perspective, he added, the attraction lies in gaining operating control of a listed platform. “Private equity does not buy history. It buys potential cash flow transformation,” Kallianpur said, noting that such platforms typically undergo portfolio rationalisation and tighter cost discipline under new ownership.

For Novartis AG, the transaction supports its simplified operating model and greater emphasis on patented innovative therapies.

India still matters

Despite the exit from NIL, Novartis emphasised that India remains a key market and operational hub. The company employs more than 9,000 associates in the country, with a significant presence in Hyderabad through its corporate center.

India continues to play a critical role in Novartis’s global research footprint, with clinical development activities spanning hundreds of trial sites, the company said.

The closing of the ChrysCapital transaction is expected in Q3 2026, subject to regulatory approvals and other customary conditions.