Indian pharma cos look to Europe for growth
Country's leading pharma companies are looking towards Europe for organic and inorganic growth with the US market, the largest one for Indian companies in terms of revenue, getting crowded.
By PTI |
MUMBAI: Country's leading pharma companies are looking towards Europe for organic and inorganic growth with the US market, the largest one for Indian companies in terms of revenue, getting crowded.
Companies such as Zydus Cadilla and Glenmark have firmed up plans to acquire pharma companies in Europe, industry sources said. Zydus Cadilla executive director Ganesh Hegde told media, "We are looking at companies generating revenues of about 30 million euros in Spain and Italy."
Glenmark is looking at Eastern Europe for growth. The company would complete an acquisition in that part by the end of this financial year, said a company source. Recently, Glenmark received its first milestone payment of Euro 25 million for one of its molecules licensed to German company Merck KGaA.
In October, Wockhardt bought an Ireland-based company Pinewood for $150 million. On the sidelines of the launch, Wockhardt Chairman Habil Khorakiwala had said, "This acquisition gives us a larger footprint in Europe spread over UK, Ireland and Germany."
After the European acquisition, Wockhardt expects its business from Europe would exceed $200 million, accounting for almost half of Wockhardt's total sales, he had said. While the US generics market is crowded, the European generics market is growing, Industry analysts pointed out.
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"Once a product becomes generic, its margin erosion is much higher in the US market than in the European market," said investment banker Gaurang Mehta. Day-by-day the regulations in the US are becoming tighter making it difficult for Indian companies to get a license to operate there, an industry source said.Small European pharma companies are looking to sell their units because their cost of production and manufacturing costs are high making it difficult for them to maintain the business, an analyst said.
Also, when an Indian buys a company, Mehta said, he would slowly transfer the manufacturing to India, a low cost destination, and just retain the front-end and marketing there.
Top global pharmaceutical companies are changing their strategies, too. They want to sell off their manufacturing unit to low-cost countries such as India and just retain the marketing and R&D units with them.
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Bangalore-based Kemwell, provider of contract manufacturing services, acquired Pfizer's manufacturing plant in Sweden for an undisclosed sum in August. Kemwell's vice-president Anurag Bagaria today said that big pharma companies want to shift their manufacturing base and concentrate on marketing and R&D."Pfizer wanted to sell their Sweden plant and also gave us a contract for supplying products in 80 countries. So we grabed the opportunity, which also takes us into the global league," he added.
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