The American giant had applied to the Foreign Investment Promotion Board (FIPB) to set up a wholly owned subsidiary. Pfizer's Inc's proposal is being handled by the Mumbai-based Ambit Corporate Finance Pte, headed by Ashok Wadhwa.

Significantly, Pfizer's proposed 100 per cent subsidiary in India may "take over" the clinical research activities of the Indian arm and enhance the level of R&D here.

Pfizer's official spokesman said Pfizer Inc was already doing clinical research in India and Pfizer Ltd was providing only administrative support. "The new company will take over the conduct of the activity and enhance the level of research. The current activities are done under the supervision of Pfizer Inc ," he said.

The move, analysts say, would mean thatPfizer Ltd may not receive inflows from such activity, though such service income was just in the region of Rs 1 crore (net).

Pfizer's 1996-97 annual report said: "During the year, the clinical research division commenced its activities. We have entered into an agreement with Pfizer Inc to carry out clinical trials and studies in India in respect of pharmaceutical and consumer healthcare products developed or are proposed to be developed by Pfizer Inc and/or its affiliates and to provide data management and analysis services to Pfizer Inc. We are receiving reimbursement of expenses and adequate compensation from Pfizer Inc for rendering these services".

For the year ended November, 1998, Pfizer Ltd spent Rs 2.47 crore on clinical trials and the Indian arm's clinical data management team is credited with achieving a zero error rate for around 50 per cent of its submissions.

On whether the board of the Indian arm has granted a "no-objection certificate" for the proposed 100 per cent subsidiary, thespokesman said, "that proviso is not relevant in this case. It applies only to joint venture arrangements".

A pocket of analysts say that the apparent lack of safeguards for the interest of the small minority shareholder was questionable and the government must plug the loophole. "The government must allow the MNCs to hold 74 per cent of the equity and let Indian shareholders partcipate in the success of top-notch companies. The government could also explore the option of a differential levels of tax on such proposals," they said.

Pfizer's spokesman, however, said the new subsidiary offered no threat or disadvantage to the Indian arm's operations. Another set of analysts claim that there was no cause for panic. "The new products coming in via the 100 per cent arm would be highly priced. If marketing is done through the Indian company, the cashflows accruing out of this activity can be used to fund acquisitions, other growth plans," they claim.

The proposed 100 per cent subsidiary would be primarilyengaged in three areas -- exploring the sourcing and procurement of raw materials, bulk drugs and formulations from India, expansion of clinical research activity and manufacturing of new molecules. It will also be a service provider to other global Pfizer affiliates.

The 100 per cent arm is also likely to get into manufacturing of new molecules. It might do toll manufacturing or use leased facilities, he said.

"Maybe, for some new research molecule, Pfizer Inc might prefer to bring it through the new subsidiary, but generally the new entity will only augment Pfizer Ltd," Pfizer's spokesman said.

INSIGHT

Scrip fall shaves off Rs 150cr market cap

The Pfizer scrip has lost Rs 128 in two trading sessions with the scrip on the lower end of the circuit filter on Monday at the Bombay Stock Exchange (BSE). ``There were only sellers at the counter at a price of Rs 1,007. The scare that all revenue generating products will be transferred to the subisdiary has led to a heavy selling in thecounter. The average volumes on the counter have seen a sharp spurt,'' said a BSE broker. The two day fall in the scrip has shaved off Rs 150 crore worth of market capitalisation at the Pfizer counter.

-- Aabhas Pandya