Consolidation helps foreign pharma majors lead the India rank listMerger and acquisitions (M&As) in the domestic and international pharma industry are gradually changing the Indian pharmalandscape in favour of foreign players.

After acquiring Ranbaxy Laboratories, Japan’s Daiichi Sankyo has jumped to the second position in the domestic pharma market, behind market leader Cipla. Ranbaxy is India’s largest pharma company by sales, but is ranked second in the Rs 35,000-crore domestic market.

Similarly, the world’s largest drugmaker Pfizer will be among the top eight firms in the domestic market once its integration with Wyeth’s India arm gets over. Pfizer agreed to buy Wyeth for $68 billion in January this year. Currently, the American firm is ranked 12th in the domestic market. 

Last week, Pfizer announced the acquisition of ICICI Venture-owned RFCL’s Rs 100-120 crore animal healthcare business. Besides, it’s in talks with Indian pharma companies for a strategic acquisition that could further strengthen the American giant’s hold in the domestic market. 

Another US major MSD will be catapulted to the top 35 in India, after it completes its acquisition of rival Schering Plough. Similarly, French major Sanofi Aventis, which is looking for acquisitions in India, could see a successful bid putting it back to the top 10 from its current position of 16. 

Before the recent round of M&As, India’s pharma market had only one foreign player — the UK-based GlaxoSmithKline (GSK) — among the top 10. Multinational companies, such as Pfizer, GSK and Novartis, played a dominant role in the domestic market till as recent as early-2007, but lost out to homegrown generics majors, such as Cipla, Ranbaxy and Zydus Cadilla. 

HDFC Securities institutional research VP Ranjit Kapadia said: “Till mid-90’s, foreign pharma firms dominated the Indian pharma industry. The introduction of the drug price control order in 1995 brought many of their drugs under price control, thus restricting their growth. At the same time, Indian pharma companies launched a slew of generic drugs outside price control, which boosted their growth.” 

Besides consolidation, a new patent regime will also drive the growth of foreign companies in India. Launched in 2005, the new patent laws provide patent holders exclusive marketing rights in India for 20 years. This will protect foreign pharma firms that hold patents from losing out to Indian companies that make low-cost copies of off-patent drugs.