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Blog: Microscopic Examination of Indian Pharmaceutical Acquisitions by Multinational Companies

2:42 AM MDT | May 26, 2010 | By GIRISH MALHOTRA

President of Epcot International

Brand companies
establishing a beachhead in India is a logical choice as they see access to a market growing at 10%+. India is a source of revenue and profit replenishment for the multinationals. The end result of such acquisitions is going to be higher drug prices for the masses or government intervention. It will be interesting to see what develops.
 
There is an underlying question about the sales of Indian pharmaceuticals companies. Why?
 
Since 2005 Indian companies have challenged multinationals and have forced a landscape change. Why are the companies being sold now when they have created very successful franchises? One could say the price was too good to refuse. Maybe, but has anyone considered another reason, i.e. lack of succession in the entrepreneur families, or letting the trained managers run and grow the companies to compete with the brand companies.
 
The Singh family (Ranbaxy) allegedly had a family feud and they brought in Dr. Brian Tempest to cool the storm. However, under the Singh family regime there were lapses as manifested by U.S. FDA’s actions. Were the lapses beyond fixing? Under these circumstances the Singh family got an offer they could not refuse. Could that be the case with the Piramal family?
 
Consolidation within India i.e. one successful company buying other pharmaceutical company is not part of the culture. Thus unless there is strong succession planning, we will see repeats of the acquisitions of Matrix Labs, Ranbaxy, Shantha Biotech and Piramal Healthcare.
 
If the entrepreneurial families do not pass the baton to trained professionals, I believe Indian pharmaceuticals, API (active pharmaceutical ingredient) companies, formulators and other associated with the pharmaceuticals could be selling out to multinationals. It will be a case of take your money and run.












 
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