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Mumbai , Nov. 15

WITH the easy availability of capital, increased global interest in India's research and development capability, the country's pharmaceutical industry offers a good climate for mergers and acquisitions.

Besides consolidating the domestic industry and attracting US and European firms, the spate of mergers and acquisitions has ushered an era of the "Indian Pharmaceutical MNC," Mr Vikas Dawra, Senior Manager-Strategic Advisory, M&A, Rabo India Finance Pvt Ltd, said at the first day's session today at CII's PharmaExpo 2003.

Citing the example of the merger between Pfizer and Warner Lambert creating the biggest pharmaceutical entity in the world, Mr Dawra explained the benefits of mergers and acquisitions as a growth strategy.

"The pharmaceutical industry is a `mergers-and-acquisitions' favourite, with transactions worth $80 billion took place globally last year," he said. The key drivers include geographical synergy for new products and markets, synergies of similar cadre of products, economy, diversification into new areas, catapulting market share and even stemming competition.

"Invariably, it is more economical to buy out or merge with a premium than to invest in a start-up, because the element of uncertainty is always there," Mr Dawra said.

During 2002-03, the Indian pharmaceutical market at $4.5 billion represents 1.6 per cent of the global market and ranks fourth in terms of volume and thirteenth in value, said Mr Cesar Menezes, Managing Director, Wallace Pharmaceuticals Ltd, and Chairman, India Pharma Inc.

He said the industry produced about 60,000 finished medicines and 40 bulk drugs, which are used in formulations.

Making a presentation on `The Emerging Face of the Indian Pharma Industry,' Ms Shalini Pillay, Associate Director, KPMG Consulting Ltd, said pharmaceutical MNCs had recorded negative growth while Indian companies had shown increasing trend of growth.

There was too much focus on the international market and companies needed to adopt a dual growth focus and explore the untapped potential of the domestic market.

"India can emerge as a global manufacturing hub with the opening of the OTC (over-the-counter) sector and the prospect of a large number of drugs going off patents post-2005," remarked Ms Pillay.

Other factors such as change in lifestyles, a greater per capita expenditure on medicines, higher process and re-engineering skills, low manufacturing costs and quick adaptation to new technology would also help the country to position itself as a preferred manufacturing destination.

According to Ms Pillay, the top 10 pharma companies contribute to 37 per cent of the Rs 20,000-crore domestic pharmaceutical market (excluding exports).

Of these, eight are Indian and only two are MNCs, she added.

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