The way Piramal Healthcare COO Vijay Shah sees it, the contract research and manufacturing services (CRAMS) industry is poised for consolidation. And his Mumbai, India-based company has the cash and the ambition to be one of the industry's consolidators, as Outsourcing-Pharma reported based on interviews and a briefing during last week's CPhI show in Madrid.
Piramal reeled in $3.7 billion from the 2010 sale of its generics business to Abbott Laboratories ($ABT), and the deep-pocketed Indian pharma services group wants to become one of the top 5 companies in the CRAMS game within 5 years, Outsourcing-Pharma reported. The company has reportedly been shopping for contract manufacturers in the U.S. and Europe, seeking buyout targets that provide such products or services as injectable meds and formulation technologies.
Shah sees consolidation as a natural next step for the fragmented industry. As quoted by the trade publication, the Piramal executive says the top 10 active pharmaceutical ingredient (API) providers in the world account less than 30% of the market. Piramal seeks to acquire multiple manufacturing outfits and build its capacity to provide services to its large pharma customers such as Pfizer ($PFE).
"The market remains fragmented," Shah said, as quoted by Outsourcing-Pharma, "and with Big Pharma customers looking to focus on just a few CRAMS partners, consolidation across surplus capacity will accompany the trend of overall growth."
Yet don't expect Piramal take a willy-nilly approach to its M&A ambitions. Shah cited private equity ownerships' desires for value pricing on their pharma services assets as one hurdle to Piramal pulling the trigger on deals. Apparently Piramal wants to be a consolidator in the CRAMS game, but only for the right price.