Global Pharmaceutical Companies Eyeing India

Abbott Laboratories has acquired full ownership of India's Piramal Healthcare Solutions business (Domestic Formulations), for an up-front payment of $2.12 billion, plus $400 million annually for the next four years. Both the companies are listed on Indian stock exchanges. Piramal Healthcare is a leader in the Indian branded generics market, and with this acquisition, Abbott becomes the leading pharmaceutical company in India. It is a big leap for Abbott, which entered the Indian pharmaceutical market about 100 years ago. According to Ajay Piramal, Chairman, Piramal Group, the combined Healthcare Solutions and Abbott businesses will become the clear market leader in India, with a market share of approximately 7 percent, whereas Abbot's pre-acquisition revenues in India was less than $20 million.

Commenting upon the acquisition, Miles D. White, Abbott Chairman and Chief Executive Officer, said, "This strategic action will advance Abbott into the leading market position in India, one of the world's most attractive and rapidly growing markets. Emerging markets represent one of the greatest opportunities in health care – not only in pharmaceuticals – but across all of our business segments. Today, emerging markets represent more than 20 percent of Abbott's total business."

With nearly $8 billion in annual revenues this year, the pharmaceutical market in India is expanding at a CAGR of almost 14-15 percent. This announcement clearly shows the interest global pharmaceutical companies have in India. There are other reasons also. The pharmaceutical industry in India has the distinction of having the highest number of the US Food and Drug Administration (FDA) approved GMP manufacturing plants outside the US. Indian pharmaceutical companies also account for almost one out of the four abbreviated new drug applications (ANDA) filed in the US, a necessary criterion for selling medicine in the US. In the case of drug master files (DMF) in the US, Indian companies file almost half of the DMFs in the US. These achievements, which highlight the industry’s technological competence and skills it possesses, are the ones that attract global MNCs’ recognition and arouses their interests.

This acquisition will further spur cross border M&A activity. While in 2009, Sanofi Aventis of France acquired India’s Shantha Biotech, and Hospira of the US acquired India’s Orchid Chemicals. The previous year, 2008, it was the acquisition of India’s Ranbaxy Laboratories and Dabur Pharma by Japan’s Daichii Sankyo and Singapore’s Fresenius Kabi respectively. Global pharmaceutical companies will continue to target India's pharmaceutical companies and the pharmaceutical market.

About Piramal Group
The Piramal Group is one of India's leading business conglomerates. The Group has interests in a myriad of industries that encompass healthcare, drug discovery & research, diagnostics, glass, real estate and financial services. Employing around 7,000 people, the Group's turnover exceeded US $1 billion in 2010.

About Abbott
Abbott is a global, broad-based health care company devoted to the discovery, development, manufacture and marketing of pharmaceuticals and medical products, including nutritionals, devices and diagnostics. The company employs approximately 83,000 people and markets its products in more than 130 countries.