Big pharma eyes Indian drug firms

That large multinational pharmaceutical companies would want to purchase Indian pharmaceutical companies is a worrying trend but not surprising. Western pharmaceutical firms are under considerable pressure to retain market share particularly as generic manufacturers continue expanding and many blockbuster pharmaceuticals come off patent. In a recent transaction, Abbott Laboratories purchased Piramal, India's fourth-largest pharmaceutical company for nine times their annual revenue - an unprecedented price in recent merger and acquisition history. The worrying element of this transaction is its implication for a pharmaceutical access in developing countries given that many governments and private markets in Africa and beyond depend on competitively priced Indian generic pharmaceuticals. Would the continuation of this purchasing trend in India spell the end of affordable pharmaceutical access in such countries? It may, but it somewhat depends on the ability of domestic and international regulatory agencies to ensure that anti-competitive behaviour does not prevent the monopolisation of the pharmaceutical industry.

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INDIAN pharmaceutical companies that had grown in the past three decades to become a powerhouse of generic manufacturers have recently been feeling the heat of prolonged and difficult litigation in major Western markets. Finding solutions: In manufacturing, big pharma companies are already striking closer relationships with Indian generics to service global markets under marketing alliances Western pharmaceutical giants have also tried to protect their markets with other restrictive practices. Now it seems that these Western companies have found another way to fight off the Indian threat: They have persuaded the Indians to take the easier and profitable route of selling out to pharma giants. The latest case is the sale of Piramal's 18.2 billion rupee (S$546 million) formulations business with 350 branded generics to Abbot Laboratories for 170 billion rupees. This is at a premium to its present market capitalisation of 108 billion rupees and the sale is valued at a high nine times annual revenue.

Source: Business Times

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