Indian Pharma MNCs Eye M&As Worth $5-100 Mn In US, Europe

Mumbai, Nov 14: | Updated: Nov 15 2003, 05:30am hrs
While the stage is set for increased M&A activity in the domestic pharmaceutical industry, Indian multinational pharmaceutical companies are on the prowl for acquisitions in the range of $5-100 million to leverage on product registrations and distribution capabilities in the European and US markets.

Delivering an address at Pharma Expo 2003 organised by the Confederation of Indian Industry (CII), Rabo India Finance Pvt Ltd senior manager (strategic advisory M&A) Vikas Dawra said: Indian pharmaceutical companies have traditionally used M&A to address specific portfolio gaps and this trend will be further strengthened by a cheering capital market. Further, good quality capacities in India with global compliances are in demand. This trend is likely to gain strength and the coming 12-18 months may see hectic M&A activity in the pharmaceutical industry in India.

Mr Dawra expounded the benefits of M&A as a growth strategy, stating that the pharmaceutical industry is an M&A favourite, with transactions worth $80 billion talking place globally last year. Key M&A drivers include geographical synergies for new products and markets, synergies of similar cadre of products, economy, diversification into new areas, catapulting market share and even stemming competition. Invariably, it is more economical to buy out or merge with a premium than to invest in a start-up, because the element of uncertainty is always there, he said.

The conference is a major initiative of the CII in bringing together various components of the pharmaceutical industry with the objective of giving new direction to the industry in a bid to enable it to attain global leadership.

Said KPMG Consulting Pvt Ltd associate director Shalini Pillay, The top 10 companies contribute to 37 per cent of the Rs 20,000 crore domestic pharmaceutical market (excluding exports), out of which only two are multinational, while the rest 8 are domestic.

MNCs on an average, had in fact recorded negative growth, while the Indian companies had exhibited increasing growth trends, she added.