Indian drug firms bought big in 2015 M&A with U.S. manufacturing focus

India-based drug companies spent $1.5 billion to buy U.S. firms in 2015 as part of an M&A effort focused on securing manufacturing facilities abroad as troubles at home mounted with a deluge of U.S. FDA actions that shut exports.

The Wall Street Journal, citing data compiled by Dealogic, said that in addition to the 2015 deals, Indian drug firms have bought, or are in the process of acquiring, 31 U.S. pharmaceutical companies.

At the same time, several Indian firms are building new plants in the U.S., even as multinationals such as GlaxoSmithKline ($GSK) step up manufacturing operations in India.

At stake, the WSJ said, is an aim by the Indian firms to get the facilities needed to sell more cutting-edge therapies in the U.S., including "high-powered painkillers, which U.S. regulators say must be manufactured domestically."

"These are very ambitious moves to go to where the market is," Dilip Shah, head of the Indian Pharmaceutical Alliance, a trade group representing Indian companies, told the WSJ.

Among the deals of note was Mumbai-based Lupin Pharmaceuticals and its purchase of two New Jersey generics companies in July for a total of almost $900 million, the WSJ said, opening a path to sell pain drug OxyContin and ADHD treatment Ritalin.

Lupin managing director Nilesh Gupta

"We started looking because we've been very India-centric in our manufacturing footprint," Nilesh Gupta, Lupin's managing director, told the WSJ. "We wanted to do controlled substances, local manufacturing--these are some broad areas we wanted to get into."

The U.S. generics market is growing 10% annually and expected to reach $71.9 billion by 2018, the WSJ said, citing consulting firm RNCOS, adding that Indian companies had 19% of the market in 2014, a slight rise from 13% in 2010.

Still, a push by Prime Minister Narendra Modi to manufacture products in India for export would seem a natural fit with the pharmaceutical industry and it low-cost model. But the WSJ, citing Indian executives, said workers and plants are not up to spec on more modern therapies that are inhaled, injected or made from biologics.

- here's the story from the WSJ