India's pharmaceutical industry is turning its back on generic formulations business when it comes to mergers and acquisitions (M&As). The number of M&As have been surging in the last couple of months, but outbound deals are mostly in areas ranging from contract research, personal care, medical equipment and pharmacy chains, thanks to the higher number of globally approved generics manufacturing facilities India.
Out of the 13 outbound deals in the last four months, only three deals are in the conventional areas like drug formulations and pharmaceuticals ingredients.
In April, the sector witnessed smaller buyouts such as SIRO Clinpharm's purchase of Omega Mediation and Jupiter Bio's takeover of Merck Life Sciences' manufacturing facility (contract research). Major buyouts like Jubilant Organosys' acquisition of Draxis Health for $255 million helped Jubilant strengthen its contract manufacturing business.
Alok Gupta, executive vice-president and country head of Life Sciences &Technology, Yes Bank, said, "Nowadays, the formulation business is not a priority in M&A deals. Indian firms have enough capacity in generic formulation manufacturing and the plants have approvals from the major regulatory authorities across the globe, which pushes them back from buying generic firms with manufacturing facilities abroad."
This year, Dr Reddy's Laboratories has made two acquisitions in sectors like contract research and manufacturing, from BASF and DowPharma, but only one in formulations, from Italian firm Jet Generici. Aurobindo's TAD Pharma acquisition and Marksans Pharma's buyout of UK-based generic firm Hale Group Ltd are other deals in formulations segment.
Gupta added, "Buying the foreign firms having R&D services and innovative technology or contract research facilities will be the trend in the future. As the Indian companies have enough approved products in the regulated markets, the firms will try their luck in the smaller untapped generic markets as far as acquisitions are concerned."
In February, Natco has entered into the US retail pharmacy chain by acquiring Newark Drugs while Vivimed Labs has strengthened its position in personal care activities industry by buying out James Robinson Ltd.
Biocon has acquired Germany-based marketing and distribution firm, Axicorp for $43.80 million. Bangalore-based medical equipment manufacturer, Opto Circuit, had acquired US-based healthcare firm, Criticare Systems, for $70 million.
On Tuesday, Veeda Oncology has acquired Paris-based oncology CRO, Biologie et Industrie.