Pharma firms to tap M&A opportunities to gain scale, tide over challenges - (livemint.com via NewsPoints Desk)

  • While leading Indian drugmakers continue to acquire assets in developed markets, such as the US, Europe and Japan, they are expected to evaluate opportunities arising out of portfolio rationalisation exercise of multinational companies, such as Teva, Novartis, Sanofi  and Mallinckrodt, as reported livemint.com Friday.

  • "Most of the large Indian companies are looking at acquisitions as they need to bulk up their product portfolio to improve growth. While focus is more on acquiring specialty products, the companies are also evaluating generic drugs opportunities because expanding product base is critical to offset impact of pricing pressure," said Sujay Shetty, pharma practice leader for India and Asia Pacific at PricewaterhouseCoopers.

  • "Given the current market conditions, there is definitely a case for consolidation in domestic market but there isn't a trend. We can call it a trend if we see many large deals happening in period of say 12 to 18 months. That is unlikely to happen in the near future," Shetty added.

  • Meanwhile, CLSA said that "valuations for M&A could become more reasonable," adding that "we expect Indian companies to participate in M&A activities due to their strong balance sheets."

  • Kedar Upadhye, Cipla's global chief financial officer, noted that "most big companies continue to explore inorganic opportunities in domestic market but they are looking for a strategic fit that will fill the gaps in their existing portfolio," adding that promoters in India are very hesitant to sell at valuations which are "reasonable" to the buyers.

  • Sanjay Singh, KPMG India's chief operating officer in deal advisory, said that while some consolidation is expected due to the prevailing growth challenges, deal activity would be largely in mid-size companies, ranking 25th to 75th in domestic market, and not much among the large companies.

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