Rise in M&A activity among Indian pharmaceutical companies

Mergers and acquisition (M&A) activity in India is heating up. The surge in transactions in the pharmaceutical industry saw 16 deals during 2022 - seemingly the largest number in a decade, worth several billion dollars in value.

In fact, this time around it is not multinational companies who are doing the buying - it is local businesses that are snapping up smaller firms and even acquiring some multinational firms that are also in the fray.

The move draws significance given the financial health and cash generated by most Indian companies, as also the availability of assets in the USA and Europe that are being divested by multinational companies for strategic reasons.

A surge in deal activity was witnessed in the first six months of the calendar year itself, with a majority of the M&A deals in the pharma sector backed by private equity (PE) investors.

Deals included Gland Pharma buy of Cenexi

The latest to join the bandwagon was Hyderabad-based injectables maker Gland Pharma, owned by Chinese drug maker Shanghai Fosun. At end November, it acquired French CDMO Cenexi Group, for an equity value not exceeding 20 million euros to expand its contract development and manufacturing business in Europe.

Then there was Torrent Pharmaceuticals’ (BSE: 500420) acquisition of dermatology firm Curatio Healthcare and Mankind Pharma's buy of Panacea's domestic formulation brands, which were among the largest deals in the market last year.

Among corporates, JB Pharma announced four deals this year.

As an industry expert puts it, some large Indian players are doubling down on the country as a diversification option from a beaten-down US generics market, due to which there were several deals where Indian companies bought local brands.

The Indian pharmaceutical industry is expected to grow by 8%-10% during the current fiscal year. In November, the market grew by 14% over the previous year, according to market research firm IQVIA.