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June 25, 2009

MNC Pharma firms step on the gas

Following the buyout of India's largest pharma firm Ranbaxy by Japan's Daiichi and RFCL's animal healthcare business by Pfizer, Businessworld has a cover story on how and why the big MNC pharma firms are now taking the Indian market more seriously.

In recent months, two other large western pharma companies — UK’s GlaxoSmithKline (GSK) and France’s Sanofi-Aventis — have made news with their acquisition plans. Others such as US’s Merck & Co., are exploring differential drug pricing, and government partnerships to tap market potential. Still others — such as Novartis India, the local arm of the Swiss drug giant — are pushing into rural markets.

..a drier blockbuster pipeline has led MNCs to place a global thrust on generics. India is one of the few remaining generics markets driven by doctor prescriptions and not just trade-push. In the US, prices collapse when a drug loses patent protection. But in India, a market leader commands a sustainable ‘brand’ premium, without any patent protection.

...Organic growth, however, will only take MNCs this far. If they want to transform into market-leading positions quickly, then acquisitions are the way forward. Besides, “they need access to the right range of products and distribution networks”, to tap the branded generics market, says Ranjit Kapadia, vice-president (institutional research) at HDFC Securities in Mumbai.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in