ImageConsolidation in India’s pharmaceutical industry is likely to continue in 2009, with at least three large international deals in the pipeline, said people involved in corporate negotiations and due diligence.

“Though the expansion strategy and the time frame may vary from company to company, as the priorities of both the buyers as well as sellers are different, certainly there are talks on cross-border deals taking place in the sector,” said an executive with a foreign drug firm based in Mumbai, who declined being named like others quoted in the story, citing ongoing talks.

GlaxoSmithKline Plc. is said to be in talks with domestic firm Piramal Healthcare Ltd, while two other drug multinationals looking to expand India businesses through acquisitions are France’s Sanofi-Aventis SA and Germany’s Merck KGaA.

In June last year, Japan’s Daiichi Sankyo Co. Ltd acquired India’s Ranbaxy Laboratories Ltd in a $4.6 billion (Rs22,954 crore) deal.
GSK’s global chief executive Andrew Witty, while announcing the firm’s annual results for 2008, had emphasized the group’s increased focus in emerging markets, including India, for future growth.

Commenting on the talks with Piramal, a spokesman from GSK India said, “We do not comment on market speculation.” A Monday email query to Piramal remained unanswered. The company had last week denied any talks with GSK, calling such reports unfounded.

In January, Merck’s India chief Marek Dziki had said the company is hopeful of signing a couple of acquisition deals later in the year. The company is currently in advanced talks with a few domestic drug makers, and also keen on local acquisitions in its core businesses of food and chemicals.

While announcing 2008 earnings on 11 February, French multinational Sanofi-Aventis’ global chief executive Chris Viebacher had said the company is looking towards consolidation opportunities in India, where it lags growth compared with other emerging markets.

The process will get expedited now in India after the global merger of Pfizer Inc. and Wyeth Inc., which was announced in January, since a few domestic players who are likely to exit from the sector were expecting a higher valuation from Pfizer, as it was keen on an Indian buy, according to an investment banker who heads the India investment banking arm of a global financial services firm. With the global takeover of Wyeth, Pfizer will also acquire its Indian subsidiary, Wyeth Ltd.

According to two other investment bankers, at least three Indian drug firms—Mumbai-based Wockhardt Ltd, Ahmedabad-based Torrent Pharmaceuticals Ltd, and a Hyderabad-based active pharma ingredient manufacturer—have been approached by deal advisers of large multinational drug firms for equity partnerships.

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