Indian pharmaceutical generics majors' growth will be driven by M&As

Indian pharmaceutical companies will continue to seek growth through the acquisition of overseas assets over the next 18-24 months, with the aim of deepening their geographic and product diversity, and further increasing their presence in developed and emerging markets, according to a new report from Moody's Investors Service and its Indian affiliate, ICRA Limited.

"The drive for overseas expansion comes amid the consolidation of the global pharmaceutical industry, as drug companies look to boost their product and pipeline diversity, scale and pricing power," says Kaustubh Chaubal, a Moody's vice president and senior analyst.

Moody's and ICRA point out that Indian pharmaceutical companies are seeking new sources of growth, against the backdrop of slowing gains in operating income, and that the companies will focus on M&As overseas because domestic consolidation among Indian entities is constrained by the high valuation expectations of founding family members and high product overlap.