Indian pharma cos aim for the biggest global buy

Industry:    April, 2016

Indian pharma cos aim for the biggest global buy

This could well be the biggest Indian acquisition in the global pharma space. Two Indian pharma giants and a private equity (PE) player are eyeing Minnesota-based 3M’s pharmaceutical business, which is up for sale.

According to private equity sources, Ranbaxy, Wockhardt and Warburg Pincus have evinced interest in the US branded generic player. 3M mandated Goldman Sachs this April to find buyers for the division — reportedly valued upwards of $1 billion. The acquisition will help the Indian pharma industry to enter the US and bag 3M’s branded drugs.

The 3M pharma division is now primarily a generic unit, with most of its popular brands like Aldara, Tambocor, Minitran et al being either off-patent or set to lose patent protection. Analysts peg 3M’s pharma revenues at around $700 million. The company, though, does not operate as a typical generic business due to lack of infrastructure to introduce such drugs.

On the purported move, 3M spokesperson Jackie Berry directed ET to refer to the company’s recent announcement to “seek strategic alternatives for its branded pharmaceuticals business”. But both Indian suitors declined comment. “As per company policy, we do not comment on market speculation,” the Wockhardt spokesperson said. Ranbaxy managing directr Malvinder Singh said, “We have no official comment to make.”

Attempts by Ranbaxy and Wockhardt to enter the US have been unsuccessful till date. Wockhardt, which was in the race to acquire Florida-based $1.9-billion Andrx, lost out to Watson. It is, therefore, still looking for a big-bang US entry.

That, however, has not been the case in other pharma markets. In March alone, Ranbaxy acquired Romania’s Terapia, Ethimed NV of Belgium and GSK’s generic business Allen SpA in Italy. Similarly, Dr Reddy’s recently acquired German generic drug maker Betapharm.

Indian pharma companies are vying for the branded generic drug space to register their global presence. Companies like Glenmark Pharma, Lupin, Aurobindo and Jubilant Organosys are amidst raising funds for lucrative acquisitions in the US and Europe.

PE players, on the other hand, are interested in units such as 3M’s pharma arm, as they can maximise revenues from certain drugs going off-patent in select markets.