Pharmaceutical Executive Europe - January 2008 - (Page 29) Pharmaceutical Executive Europe January 2008 Generics 29 Ms Hoffman believes that the phenomenon of consolidation reflects the increasing number of Indian companies trying to compete in the US and EU, and notes in her report that the dearth of new product launches not only encourages consolidation in large, branded pharma companies but also for generics companies. There are two distinct reasons for consolidation: ● Companies with few capabilities of building a product pipeline that can deliver quality earnings and growth will need to be involved in mergers and acquisitions. ● Companies with strong pipelines and good cash flow are likely to acquire for expansion into new markets, with supporting sales force and new platform technologies. Indian generics companies fall into the latter category. They are “potentially the most aggressive” and now appear to have “the ability to secure financial backing to contemplate the acquisition of significantly larger companies…” according to Dr Peter Norman, industry analyst and author of Consolidation in the Generic Pharmaceutical Industry.1 “Most of the leading Indian companies have been active in making acquisitions to enhance their strategic position, while there is increasing interest in their acquisition that an outsider provides,” he adds. Indian companies are increasingly looking to expand operations much further afield than their domestic markets. Most top-rung Indian companies aim to adopt the strategy of manufacturing in India and selling to the US and Western Europe. Industry experts believe that Indian generics companies stand to gain heavily from acquisitions in these regions, as they position themselves as partners with local management. This stands them in good stead in their attempts to break into these regions, which have specialised, regulated and lucrative markets. In addition, the Indian companies gain instant access to local brands that would otherwise take time to build. though the US market is an attractive one for acquisitions, Europe has significant potential: “The European generics market,” he wrote, referring to the Dr Reddy’s acquisition of Germany’s Betapharm, “holds more promise.” Recently there has been a spate of Indian companies snapping up international firms. The largest players in India — Ranbaxy, Sun Pharma and Dr. Reddy’s Laboratories — have been in the acquiring game for two years. In 2006, total European sales of generic drugs were $27.8 billion.4 The figure was split almost equally between Western Europe and Central and Eastern Europe, with market penetration averaging 27% by volume. The report also says, however, that there is considerable variation in market penetration by generics within Europe, ranging from 3.5% in Italy to 50.7% in the Czech Republic by value. It notes that Germany and the UK were the largest generics markets in 2006, with France and Switzerland swiftly catching up. Medium-sized and even smaller companies are not to be left behind and are raising funds for overseas deals. In February 2006, Aurobindo Pharma announced it was acquiring Milpharm, a British generics-maker. Earlier, in June 2005, Matrix Laboratories acquired Belgian drug maker Docpharma for $263 million. The smaller scale Table 1: Leading Indian generics manufacturers, showing sales revenues for fiscal 2006 (mostly year ending 31 March 2007) and market capitalisation in April 2007. Company 2006 revenues ($m) 1340 1500 909 528 503 427 331 387 320 308 231 159 Market capitalisation ($m) 3600 2800 3920 4800 1390 1110 990 420 600 1870 340 1280 Indian acquisitions in Europe Recently there has been a spate of Indian companies snapping up international firms. The largest players in India — Ranbaxy, Sun Pharma and Dr. Reddy’s Laboratories — have been in the acquiring game for two years. Since early 2006, Ranbaxy has acquired Romania’s largest independent generics company, Terapia (the generic business of Italy’s Allen SpA, a division of GSK), as well as GSK’s Spanish generics business, Mundogen. Dr Reddy’s bought Germany’s Betapharm and soon after, Sun Pharma acquired Israel’s Taro Pharmaceutical. Another Indian drug-maker, Wockhardt, has been on a buying spree for more than a year, acquiring Pinewood, the largest generic firm in Ireland, in October 2006; Negma, the fourth largest independent pharmaceutical firm in France, in May 2007; and Morton Grove Pharmaceuticals, a liquid generic and specialty dermatology company in the US, in October 2007. Ranjit Shahani, quoted in a report by KPMG, The Indian Pharmaceutical Industry: Collaboration for Growth,4 says that even Ranbaxy Dr Reddy’s Cipla Sun Pharma Lupin Wockhardt Zydus Cadila Aurobindo Torrent Pharmaceuticals Glenmark Orchid Nicholas Piramal Source: Norman Consulting www.kpmg.ca/en/industries/cib/biotech/IndianPharmaCollabforGrowth.html
Table of Contents Feed for the Digital Edition of Pharmaceutical Executive Europe - January 2008 Pharmaceutical Executive Europe - January 2008 Contents From the Editor News and Analysis Calendar Corporate Strategy: Walking the Line Executive Profile: The Pharmacist’s Friend Q&A: An End to Drug Counterfeiting Healthcare Cost Assessment: Ready to Make NICE? Pricing and Reimbursement: Through the Reimbursement Barriers Generics: India Inc. The Mix: New Models of Excellence Last Word: Mid-size Matters Pharmaceutical Executive Europe - January 2008 Pharmaceutical Executive Europe - January 2008 - Pharmaceutical Executive Europe - January 2008 (Page 1) Pharmaceutical Executive Europe - January 2008 - Pharmaceutical Executive Europe - January 2008 (Page 2) Pharmaceutical Executive Europe - January 2008 - Contents (Page 3) Pharmaceutical Executive Europe - January 2008 - From the Editor (Page 4) Pharmaceutical Executive Europe - January 2008 - From the Editor (Page 5) Pharmaceutical Executive Europe - January 2008 - News and Analysis (Page 6) Pharmaceutical Executive Europe - January 2008 - News and Analysis (Page 7) Pharmaceutical Executive Europe - January 2008 - News and Analysis (Page 8) Pharmaceutical Executive Europe - January 2008 - News and Analysis (Page 9) Pharmaceutical Executive Europe - January 2008 - News and Analysis (Page 10) Pharmaceutical Executive Europe - January 2008 - News and Analysis (Page 11) Pharmaceutical Executive Europe - January 2008 - Calendar (Page 12) Pharmaceutical Executive Europe - January 2008 - Calendar (Page 13) Pharmaceutical Executive Europe - January 2008 - Corporate Strategy: Walking the Line (Page 14) Pharmaceutical Executive Europe - January 2008 - Corporate Strategy: Walking the Line (Page 15) Pharmaceutical Executive Europe - January 2008 - Corporate Strategy: Walking the Line (Page 16) Pharmaceutical Executive Europe - January 2008 - Corporate Strategy: Walking the Line (Page 17) Pharmaceutical Executive Europe - January 2008 - Executive Profile: The Pharmacist’s Friend (Page 18) Pharmaceutical Executive Europe - January 2008 - Executive Profile: The Pharmacist’s Friend (Page 19) Pharmaceutical Executive Europe - January 2008 - Q&A: An End to Drug Counterfeiting (Page 20) Pharmaceutical Executive Europe - January 2008 - Q&A: An End to Drug Counterfeiting (Page 21) Pharmaceutical Executive Europe - January 2008 - Healthcare Cost Assessment: Ready to Make NICE? (Page 22) Pharmaceutical Executive Europe - January 2008 - Healthcare Cost Assessment: Ready to Make NICE? (Page 23) Pharmaceutical Executive Europe - January 2008 - Healthcare Cost Assessment: Ready to Make NICE? (Page 24) Pharmaceutical Executive Europe - January 2008 - Pricing and Reimbursement: Through the Reimbursement Barriers (Page 25) Pharmaceutical Executive Europe - January 2008 - Pricing and Reimbursement: Through the Reimbursement Barriers (Page 26) Pharmaceutical Executive Europe - January 2008 - Pricing and Reimbursement: Through the Reimbursement Barriers (Page 27) Pharmaceutical Executive Europe - January 2008 - Generics: India Inc. (Page 28) Pharmaceutical Executive Europe - January 2008 - Generics: India Inc. (Page 29) Pharmaceutical Executive Europe - January 2008 - Generics: India Inc. (Page 30) Pharmaceutical Executive Europe - January 2008 - The Mix: New Models of Excellence (Page 31) Pharmaceutical Executive Europe - January 2008 - The Mix: New Models of Excellence (Page 32) Pharmaceutical Executive Europe - January 2008 - The Mix: New Models of Excellence (Page 33) Pharmaceutical Executive Europe - January 2008 - The Mix: New Models of Excellence (Page 34) Pharmaceutical Executive Europe - January 2008 - Last Word: Mid-size Matters (Page 35)
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