There's a bit of hand-wringing in India now that Abbott Laboratories (NYSE: ABT) has agreed to buy Piramal Healthcare's generics business for $3.7 billion. That's because Abbott becomes India's biggest drugmaker in one dealmaking handshake. According to the Economic Times, that makes foreign companies three of the top five drugmakers in the country--and multinational drugmakers together now command 25 percent of the domestic drug market.
Plus, with analysts predicting more deals, multinationals' share of the market is only expected to grow. Analysts are telling the ET that multinational drugmakers soon will boast nearly 50 percent of the Indian pharma market. "In the next 3-4 years, foreign players' market share should cross 40 percent in the domestic retail market," Yes Bank's Life Sciences VP Vishal Gandhi tells the newspaper. And as Tarun Shah of MP Advisors tells LiveMint, "At least two more deals (of foreign firms acquiring Indian drugmakers) are likely in the next 18 months."
This trend reverses gains that Indian drugmakers have made over the last few decades. Back in the 1970s, multinational firms owned more than 75 percent of India's drug market. Then, thanks to some regulatory changes, the Indian generics business was born--and grew fast. Some Indian drugmakers grew so much that they began snapping up companies on other continents to gain strength in markets such as the U.S. and Europe. The pharma industry became a source of pride for Indian economic boosters.
Now that generics and emerging markets are all the rage among Big Pharma--which is looking to diversify to soften the oncoming onslaught of competition for some mega-blockbuster meds--drugmakers are buying up and tying up in India. Though GlaxoSmithKline and Sanofi-Aventis have been among the Big Pharmas to announce tiered pricing for emerging markets, some in India still worry that drug prices will rise because of the buyouts and other deals. That remains to be seen, of course. But there's no doubt Big Pharma will carry more weight on the subcontinent.