Reasons for Mylan’s Delhi High Court move: Oxytocin stock, doubts over investment returns

Till April this year, Mylan had around 50 per cent share in sales by volume of the Indian Oxytocin market.

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Firm’s Oxytocin brand Syntocinon was bought from Novartis in FY18.

The refusal of its contract manufacturer Sovereign Pharma to continue Oxytocin production; the presence of sizeable inventory with limited shelf life; uncertainties over its ability to extract returns from the investments made while purchasing Oxytocin’s popular brand from Novartis. These are among the main reasons that prompted US-based pharma major Mylan to file petition in the Delhi High Court against the Centre’s proposed ban on Oxytocin production by private licensed companies.

Mylan currently sells Oxytocin under the brand name Syntocinon, purchased from Novartis in 2017-18. Till April this year, Mylan had around 50 per cent share in sales by volume of Indian Oxytocin market. “As per the deal with Novartis, along with the brand, Mylan purchased the Syntocinon inventory from Novartis that had a shelf life of more than 50 per cent as on March 26. Meanwhile, on April 27, the government issued the notification stating that Oxytocin production would not be permitted from July 1. Therefore, Sovereign told Mylan that it would not be able to manufacture Syntocinon post June 30,” stated a senior Mylan executive anonymously.

In its April 27 notification, the Centre stated that private firms would not be allowed to manufacture Oxytocin for domestic use from July 1. The Delhi High Court on August 31 pushed the date of proposed ban to October 1.

Sovereign has a contract with Mylan to manufacture Oxytocin. However, Centre’s counsel told the Delhi HC on August 29 that Sovereign has stopped manufacturing Oxytocin altogether. A Sovereign executive claimed that it has started manufacturing Syntocinon for Mylan post HC’s August 31 order, wherein it postponed the date of ban from to October 1. However, Sovereign Pharma and Mylan did not respond to the queries mailed by The Indian Express.

Mylan has made Sovereign a respondent in the case filed in Delhi HC as it stopped Oxytocin production, according to Mylan executive quoted above. Therefore, during an August 29 hearing, the lawyer representing Sovereign Pharma was sitting alongside Centre’s counsel and presented his arguments from there only. However, in all hearings post August 29, Sovereign’s lawyer has been sitting alongside the lawyers of petitioners — Mylan, Neon Laboratories and All India Drug Action Network (AIDAN). Sovereign did not respond to the query of The Indian Express as to why their lawyer is sitting along with petitioners even though Sovereign is a respondent.

Poonawalla group companies — Poonawalla Finance Private Limited and Poonawalla Investments and Industries Private Limited — own 50 per cent stake in Sovereign Pharma. Serum Institute of India Private Limited, world’s largest vaccine manufacturing company in volume terms, is owned by Poonawalla group.

Adar Poonawalla, Cyrus Poonwalla as well as Shapoor Mistry are directors in Sovereign Pharma. S P Finance Private Limited — which is owned by Shapoorji Pallonji group — owns 25 per cent in Sovereign Pharma. When it comes to Oxytocin sales by volume in India, Mylan had a 50 per cent market share till April this year, according to the Mylan executive quoted above. “It is important that Mylan is able to get its return on investment,” the executive added with regard to Syntocinon brand and inventory purchase from Novartis.