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Indian pharma’s struggle to tighten standards paves way for M&A deals

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Indian pharma's struggle to tighten standards paves way for M&A deals
People walk past a chemist shop at a market in Mumbai. Photo: Reuters

MUMBAI – India’s smaller generic drugmakers, struggling to cope with a bruised reputation and tougher regulation in the United States, are under pressure to consider branching out to new, less-profitable markets or sell out to larger rivals.

Two years after its most high-profile regulatory setback to date in the United States – Ranbaxy’s $500 million U.S. fine for drug safety violations – India’s $15 billion a year generic drug industry is still rebuilding its image in its biggest market.

Many of its top firms are facing sanctions at some of their factories, as the U.S. Food and Drug Administration (FDA) tightens checks and its approvals process.

Combined with government-mandated price controls on drugs at home, that is piling pressure on smaller players.

“If they want to have a presence globally, they have to make investments. If they can’t, then they’ll have to focus on other markets or scale back their ambition outside of India, and that’s probably what will happen,” said Subhanu Saxena, CEO of Cipla , India’s fourth-largest drugmaker by revenue.

Ashok Anand, president of Hikal Ltd , a Mumbai-based drugmaker with a market value of $167 million, said some peers were putting themselves on the block.

“If they cannot deal with the stricter regulations, they might just prefer to sell out,” he said.

Pressure on U.S. sales has been felt across the Indian industry, with all drugmakers hit by delays in FDA approvals as the U.S. safety body overhauls its review process. Growth in U.S. revenue for drugmakers slowed to 14 percent in the year to March 2015, less than half what it was in the year to March 2012, according to brokerage Edelweiss.

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But for larger players who want to plug gaps or, for the likes of Glenmark and Aurobindo who aim to grow in the United States, this pressure has lowered prices and could pave the way for attractive deals, bankers said.

“Now that some of the smaller companies are reeling under intensive regulatory scrutiny and want to cash out on their investments, valuations would be much more realistic,” said the head of India M&A at a large European bank in Mumbai.

SPENDING SPREE

Indian manufacturers say they have spent millions in high-end testing equipment, improved training and have hired larger teams in quality control since Ranbaxy was fined for manipulating clinical data.

Some consultants estimate spending on compliance has more than doubled to reach about 6 to 7 percent of sales for the larger companies.

But while the number of U.S. export bans issued to Indian companies fell to eight in 2014 from 21 in 2013, according to FDA data, the agency continues to find manufacturing violations at the plants of some of the biggest drugmakers in the country, an indication of the pervasiveness of the problem.

Sun Pharmaceutical Industries , Wockhardt , Dr Reddy’s Laboratories and Cadila Healthcarehave all faced FDA rebukes over the past year.

Smaller firms Ipca and Aarti Drugs faced FDA bans on their plants this year.

These failures – which executives blame on India’s “quick fix” culture and consultants blame on a failure to prioritize compliance – have clouded short-term growth prospects and added to pressure on smaller players, pushing some to look elsewhere.

“They can choose to be in lesser-regulated markets, such as Latin America, where there is a lot of demand. But they will have to live with much thinner margins,” said the finance director of a small Indian drugmaker, who did not want to be named. “It’s survival of the fittest.” REUTERS

 

http://m.todayonline.com/business/indian-pharmas-struggle-tighten-standards-paves-way-ma-deals

 

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DR ANTHONY CRASTO

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DR ANTHONY MELVIN CRASTO Ph.D

DR ANTHONY MELVIN CRASTO Ph.D

DR ANTHONY MELVIN CRASTO, Born in Mumbai in 1964 and graduated from Mumbai University, Completed his Ph.D from ICT, 1991,Matunga, Mumbai, India, in Organic Chemistry, The thesis topic was Synthesis of Novel Pyrethroid Analogues, Currently he is working with GLENMARK PHARMACEUTICALS LTD, Research Centre as Principal Scientist, Process Research (bulk actives) at Mahape, Navi Mumbai, India. Total Industry exp 29 plus yrs, Prior to joining Glenmark, he has worked with major multinationals like Hoechst Marion Roussel, now Sanofi, Searle India Ltd, now RPG lifesciences, etc. He has worked with notable scientists like Dr K Nagarajan, Dr Ralph Stapel, Prof S Seshadri etc, He did custom synthesis for major multinationals in his career like BASF, Novartis, Sanofi, etc., He has worked in Discovery, Natural products, Bulk drugs, Generics, Intermediates, Fine chemicals, Neutraceuticals, GMP, Scaleups, etc, he is now helping millions, has 9 million plus hits on Google on all Organic chemistry websites. His friends call him worlddrugtracker. His New Drug Approvals, Green Chemistry International, All about drugs, Eurekamoments, Organic spectroscopy international, etc in organic chemistry are some most read blogs He has hands on experience in initiation and developing novel routes for drug molecules and implementation them on commercial scale over a 29 year tenure till date Aug 2016, Around 30 plus products in his career. He has good knowledge of IPM, GMP, Regulatory aspects, he has several International patents published worldwide . He has good proficiency in Technology transfer, Spectroscopy, Stereochemistry, Synthesis, Polymorphism etc., He suffered a paralytic stroke/ Acute Transverse mylitis in Dec 2007 and is 90 %Paralysed, He is bound to a wheelchair, this seems to have injected feul in him to help chemists all around the world, he is more active than before and is pushing boundaries, He has 9 million plus hits on Google, 2.5 lakh plus connections on all networking sites, 25 Lakh plus views on dozen plus blogs, He makes himself available to all, contact him on +91 9323115463, email amcrasto@gmail.com, Twitter, @amcrasto , He lives and will die for his family, 90% paralysis cannot kill his soul., Notably he has 13 lakh plus views on New Drug Approvals Blog in 212 countries......https://newdrugapprovals.wordpress.com/ , He appreciates the help he gets from one and all, Friends, Family, Glenmark, Readers, Wellwishers, Doctors, Drug authorities, His Contacts, Physiotherapist, etc

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