All?s not quiet on the M&A front. A host of Indian life sciences companies in the contract research and manufacturing space, which includes the likes of GVK Biosciences, Syngene (the clinical research arm of biotech major Biocon), TCG Life Sciences, Jubilant Organosys and Sanmar Speciality Chemicals, are said to be scouting for acquisitions in the US and Europe in the chemistry and custom synthesis space. In pharma lingo, custom synthesis is used for producing organic drug compounds to the specification of the client for further research & development needs.
Merchant banking sources said while M&As have slowed down in the formulations space, the contract research segment is highly active. Bankers are being given the mandate to scout for M&A targets, which will give Indian companies better customers, including multinational companies, in the regulated markets of US and Europe. Individual deals can go up to $50 million each, depending on the target firm?s size and strategic fit.
The clinical and custom synthesis market in India is estimated at $300-$400 million, growing at 30-40%. ?Contract research firms are keen to have good assets in the US and Europe,? said a banker. Indian firms are looking at dossier companies and those having good marketing and distribution networks. ?Overall, the focus on R&D services is becoming more robust,? he added.
DS Brar, chairman, GVK Biosciences, told FE, ?We are exploring the possibilities of expanding business to foreign countries. We are also looking at acquisition opportunities abroad. But as of now, there are no concrete plans.?
Most companies are beefing up their back-end operations, by appointing more scientists on their rolls in India. They would then scout for business from firms in the developed countries. While this is happening in the niche custom synthesis segment, interest has waned in the formulations business, as companies have already built a lot of capacity in that segment.
According to experts, by acquiring an existing business overseas in this segment, companies have a lot to gain. Apart from the infrastructure and the team, companies can get the existing customers and contracts of the acquired company.