GSKBritish drugmaker GlaxoSmithKline says it will pursue acquisitions in emerging markets, but expectations of family-owned companies are ‘unreasonable’ and the company would not pay such a price.

GSKOutlining its emerging markets strategy, Abbas Hussain, GSK’s president of emerging markets told in a conference call, “We will continue our acquisitions plans with the same pace. Many companies in the emerging markets are family-owned or hold a lion’s share in listed companies. Some of their valuations are unreasonable and we will not overpay,” he said.

In the past few months, GSK has either acquired or entered into alliances with several companies in emerging markets, including South Africa and India, to sell its partner’s drugs globally.

He declined to comment on reports that the company would buy about five per cent stake in Dr Reddy’s. In India, GSK is the largest global pharma major and trails behind domestic majors Cipla and Ranbaxy.

The company is trying to consolidate its drug supply deal with India’s Dr Reddy’s Labs and South Africa’s Aspen and is in the process of registering their drugs globally. These drugs are expected to be launched by 2012.

The company’s growth from emerging markets would be better than the industry rate of about 16 per cent, Mr Hussain said, adding that the company will maintain an operating margin of mid-30s. The company’s business in these regions would be driven by launch of its top selling branded drugs, increased product basket and vaccines business.

Emerging markets are roughly worth 50 billion pounds. By 2015, this should double and by 2020, its size would be equivalent to the US market and the major five in Europe, he said.

Global pharma majors such as Pfizer, GSK and Sanofi Aventis are now aggressively scaling up their businesses in emerging markets to offset their pending loss of sales when patents on their blockbuster drugs expire in the next 2-3 years. IMS Health projects emerging markets to grow between 13-15% in the coming decade, compared with just 1-3 per cent for mature markets.

“The best selling drugs in China and India is 70 million pounds and 20 million pounds respectively. Healthcare costs are paid from pockets, “he said, explaining the need to widen its drug portfolio and offer affordable drugs in emerging markets.