Abbott Snags Top Spot in India With Piramal
May21

Abbott Snags Top Spot in India With Piramal

After much speculation about suitors ranging from Pfizer, GlaxoSmithKline, and Sanofi-Aventis, Abbott is coughing up $3.3 billion--$2.12 billion in cash up front and $400 million annually over the next four years--for the formulations business of Piramal Healthcare of India. The move makes Abbott top dog in the Indian pharmaceutical market, with a market share of roughly 7%. It’s a coveted position in an environment where the majority of drug industry growth is expected to come from emerging markets. Abbott has been ramping up its established products business since creating the separate division in 2007. Last fall, the company bought Solvay’s pharmaceuticals business for $7.6 billion, which brought a portfolio of branded generics and a presence in emerging markets. The Piramal deal comes on the heels of a smaller pact with Ahmedabad, India-based Zydus Cadila, which included 24 products sold in 15 emerging markets with the option to add 40 more products. Abbott says emerging markets already represents over 20% of its total business. The companies say the Indian pharma market is expected by 2015 to more than double from the roughly $8 billion in sales this year. With the addition of Piramal, which will have branded generics sales of about $500 million in 2011, Abbott’s Indian business is expected to grow nearly 20% per year, reaching annual sales of over $2.5 billion by 2020. “Emerging markets” have become the buzz words du jour at big pharma, as improving economies mean more people can afford medicines in countries like China, India, Brazil, and Russia. According to Burrill & Co, just 13% of the pharma world was in emerging markets in 2011, whereas forecasts suggest 50% of business will be in those markets by 2020. At the JPMorgan Healthcare conference this fall, most of the big players devoted a healthy portion of their face time with investors to discussing their strategy in those areas. As Sanofi-Aventis CEO Christopher Viehbacher noted at the time, more than 50% of growth in the drug industry will come from those regions. As a result, big pharma firms have been scrambling to establish partnerships that can swiftly get them on the ground in those countries. GSK has a broad deal with South Africa’s Aspen Pharmacare and a pact with India’s Dr. Reddy’s Laboratories. Pfizer has established pacts with several Indian firms, including Strides Arcolab, Aurobindo, and Claris Life Sciences. Sanofi-Aventis has bought Indian vaccines maker Shantha Biotechnics, and the Czech generics firm Zentiva. Even biotechs are starting to get into the game: earlier this year, Cephalon bought Swiss generics firm Mepha. For Piramal, the sale of the formulations business to Abbott appears to be part of...

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