Serum Institute and Cipla in early merger talks

Serum Institute Chairman Cyrus Poonawalla

Serum Institute of India and Cipla already have an agreement to distribute the former's low-cost vaccines in Europe, but the partnership may not stop there. The two India-based companies have held preliminary discussions on a possible merger, said Cyrus Poonawalla, chairman of Serum Institute.

"We could never go up for sale, but we could merge with some company ... for example, Cipla, which will give a big synergy to both the companies. There's a small chance that that could happen," Poonawalla said in an interview with CNBC-TV18.

"We have to see how our initial partnership bears fruit," Poonawalla said. "If it moves (in) the right direction, then maybe we'll take it to the next stage."

When asked if Serum was already in talks with Cipla, he said, "a little bit, yes, because we have joined hands with them to launch our products in Europe." In November 2014, the two companies inked a deal under which Cipla would seek EMA approval for, and market, approved Serum-produced vaccines in Europe.

The largest vaccinemaker in Asia, Serum is challenging Big Pharma's dominance in the vaccine sphere by developing low-cost alternatives, including vaccines against measles, HPV, and most recently, pertussis. The company plans to have its pertussis candidate on the market within the the next two years and its HPV jab out in 2018 at one-third the price of Merck's ($MRK) Gardasil. Its measles vaccine is undergoing clinical trials, and because it's powdered, it doesn't require needles or reconstitution with clean water.

A Serum-Cipla merger would marry Serum's vaccine prowess with Cipla's marketing expertise and could threaten Big Pharma's market share in multiple disease areas.

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