Indian and foreign generic drug makers seem to focus increasingly on the relatively fast-growing injectables segment to ramp up their revenues. A slew of acquisitions in the last couple of years in this space bears this out. Analysts say even in the high-risk, high-reward Para IV space, injectables are now gaining traction.
Research agency Espicom estimates the global generics injectables market at $12.2 billion. This, of course, is quite small considering the mammoth size of the global pharmaceutical industry (the world’s largest drug-maker Pfizer’s 2013 revenue alone was close to $52 billion), but the growth potential is seen to be big. Some of the injectable products — like those in oncology segment — also offer very attractive margins of 75-80%, which is why generic drug companies are eyeing this market with new-found vigour. Shortage of injectables in the US market is adding to the trend.
The $100-billion US branded-drug market will lose patent protection by 2018 as a patent cliff is approaching. Generic players see great scope in this unravelling of patents, not only in conventional chemical drugs but also in complex biologics, vaccines, etc, many of which belong to the injectables category.
The recent spate of deals in the injectables segment would find foreign and Indian firms among aggressive acquirers. Lupin Laboratories bought Dutch injectables maker Nanomi on February 4 in one of the latest such buyouts in the space. In November 2011, The Mumbai-based drug maker had bought Japanese specialty injectables company I’rom Pharmaceutical — a transaction more focused on making inroads into the Japanese market. The company did not disclose the size of either of the transactions.
The global leader in injectables and infusion medicines, US-based Hospira, bought Chennai-based Orchid Chemicals and Pharmaceuticals’ injectable manufacturing facilities for $200 million in August 2012.
Dr Reddy’s Laboratories marked its entry into the sector with its R193-crore purchase of Netherlands-based specialty injectables company OctoPlus in October 2012.
Mylan kicked off 2013 with a $1.75-billion buyout of Bangalore-based Agila Specialties, an injectables company and a subsidiary of Strides Arcolab. Private equity firm KKR announced its maiden investment in the pharmaceutical sector — a 35% stake in Hyderabad-based Gland Pharma, an injectables manufacturing company, for $200 million.
Injectables is already showing its importance, with Dr Reddy’s US revenue in three quarters of 2014 fiscal seeing a strong growth, helped by niche injectable launches. JPMorgan analysts estimate its complex injectables portfolio, market share benefits