What’s behind Indian pharma cos’ global acquisition spree

After more than a decade of caution and organic growth, leading Indian pharmaceutical companies like Biocon, Mankind, Lupin, Zydus Lifesciences, Torrent, Marksans Pharma and Gland Pharma are now on an acquisition spree.

Unlike in the early part of the century when Indian pharmaceutical companies went on a mad rush to acquire big assets in the U.S. and Europe for high valuations, which later caused financial trouble for many of them like erstwhile Ranbaxy Laboratories (which was sold to Daiichi Sankyo and then to Sun Pharma) and Wockhardt, now the Indian pharmaceutical companies are cautious  in acquiring strategic small assets and brands for relatively smaller valuations that fit their business growth plans without straining their balance sheets as happened in the past, say industry experts. "The current moves are more aligned with the financial health and cash generated by these companies and availability of brands or assets in the U.S. and Europe being divested by multinationals for strategic reasons", said a senior executive with a multinational drug major. 

India's healthcare firms spent $4.32 billion during January to June of 2022 on mergers and acquisitions (M&A), compared to $2.02 billion in the same period last year, according to VCCEdge, a data and intelligence platform.

The M&A activity has gained momentum this week. The latest to join the bandwagon of Indian acquirers was Hyderabad based injectables maker Gland Pharma, owned by Chinese drug maker Shanghai Fosun Pharmaceutical. On November 29, it acquired French Contract Development & Manufacturing Organisation (CDMO) Cenexi Group, for an equity value not exceeding 20 million euros or nearly ₹1,000 crore to expand its contract development and manufacturing business in Europe. Founded in 2004 and carved out from Swiss multinational Roche, Cenexi has expertise in making sterile injectables, makes ampoules, vials, etc. It has presence across four manufacturing sites in Europe, which include three sites in France and one in Belgium. “This acquisition would be Gland Pharma’s first international acquisition, and it would perfectly support our goal of deepening access into the European markets,” says Srinivas Sadu, managing director and chief executive officer, Gland Pharma.

On November 29, Biocon Biologics, the biosimilars (copycat biotech drug) manufacturing arm of Biocon said it completed the acquisition of the global biosimilars business of its partner Viatris for $3 billion, a deal announced this year in February. "The acquisition of Viatris’ global biosimilars business is a historic inflection point in Biocon Biologics’ journey of becoming a world leading, fully integrated biosimilars enterprise," says Kiran Mazumdar-Shaw, Executive Chairperson, Biocon Biologics.

Biocon Biologics has a portfolio of 20 biosimilar assets, including insulins and monoclonal antibodies spanning therapy areas such as diabetes, oncology, immunology, and ophthalmology. With the acquisition, Biocon joins emerges as a leading biosimilars player from India with eight commercialised products. With the closing of the deal, Biocon Biologics will have full ownership of its collaboration assets, breast cancer drug bTrastuzumab, bPegfilgrastim used to treat low white blood cells, cancer drug bBevacizumab, insulin bGlargine and bAspart, breast cancer drug bPertuzumab, and  insulin bGlargine 300U, as well as Viatris’ rights for the in-licensed immunology products of bAdalimumab and bEtanercept. Biocon Biologics has also acquired Viatris’ rights for bAflibercept, which is used to treat several ophthalmology conditions.

In another deal this week, Ahmedabad-based  Zydus Lifesciences acquired some of the active pharmaceutical ingredient (API) assets in India of U.S.-based Watson Laboratories, now a subsidiary of Teva Pharmaceuticals, U.S.. These include a manufacturing facility at Ambernath, 3 Drug Master Files (DMFs) or approvals to commercialise products, other assets and liabilities and employees. The facility was catering to API requirements of Israel-based Teva Group.

In a similar unrelated deal a month ago, home grown Marksans Pharma had acquired Teva Pharma India's Goa-based bulk pharmaceutical formulations business for an undisclosed amount. Marksans, which currently has three manufacturing sites in Southport (U.K.), Farmingdale (U.S.) and Goa (India) and with the new acquisition, plans to double its existing domestic manufacturing capacity. The acquired unit makes tablets, hard and soft gel capsules, ointments, gummies and creams.

Another Indian drug major to make an acquisition this week was Lupin's wholly owned Brazilian subsidiary, MedQuimica, which bought rights to nine brands from Bausch Health, a Canadian multinational specialty pharmaceutical company. MedQuimica, which Lupin acquired in 2015, will add nine products including Limbitrol, Melleril and Dalmadorm for Central Nervous System related conditions, Bacrocin, Glyquin, Solaquin, Oxipelle and Efurix as topical oncological treatments, and Cuprimine for the treatment of Wilson's disease to its portfolio. A month ago, Lupin had acquired two inhalation medicines, Brovana (arformoterol tartrate) Inhalation Solution and Xopenex HFA (levalbuterol tartrate) Inhalation Aerosol from US based Sunovion, owned by Sumitomo Pharma of Japan, for $75 million.

Yet another deal this week was domestic pharmaceuticals major Mankind Pharma's acquisition of Upakarma Ayurveda through one of its subsidiaries for an undisclosed sum. The deal will help Upakarma Ayurveda to widen its product offering, penetrate the market and leverage Mankind's strong domestic distribution network, says Mankind Pharma. Another deal this week was U.S.-based food technology startup Perfect Day's acquisition on Wednesday of Gujarat based Sterling Biotech, a fermentation specialist in pharma and protein segments.

In a recent domestic deal, Ahmedabad-based Torrent Pharmaceuticals acquired Chennai-based Curatio Healthcare, which manufactures skincare products for about Rs 2,000 crore. Reports had said apart from Torrent, other domestic majors like Aurobindo, Dr. Reddy’s, JB Chemicals, Biocon and Zydus were in the race to acquire Curatio's dermatology products. The skincare market in India was valued at $2.6 billion in 2021 and projected to grow at a compounded annual growth rate (CAGR) of more than 10% between 2021 to 2026.

In June, Dr. Reddy's Laboratories had acquired a portfolio of branded and generic injectable products from USA-based Eton Pharmaceuticals, for $50 million. In May this year, Sun Pharmaceutical acquired the Uractiv portfolio (food supplements including minerals, vitamins and adjuvants; cosmetics and medical devices used for maintaining urinary tract health) from Fiterman Pharma in Romania.  Another drug major Aurobindo Pharma made two acquisitions this year - the domestic formulations business of Veritaz to enter domestic biosimilar business in March and 51% stake in GLS Pharma, which has a cancer drug making facility in Hyderabad.