The Hindu Business Line : Winds of consolidation

The deal highlights two key issues: One, the realisation among large generic players that to be competitive a manufacturing presence in India is becoming increasingly imperative. Notably, other players such as Teva and Actavis have already established an Indian footprint.

Cost advantages

Second, and more importantly, following such a model confers upon international generic players the ability to replicate the cost advantages being enjoyed by their Indian counterparts.

Should this acquisition be a harbinger of more deals of this nature, it could undermine the competitiveness of large domestic players targeting the global opportunity in generics.

On the face of it, the deal between a big player in the formulations business (Mylan) and an outfit that is among the bigger manufacturers of bulk drugs (Matrix) suggests synergies. However, while Mylan has strengths in the cardiovascular (and related therapies) and pain management areas, Matrix's key areas include anti-retrovirals (for treating AIDS) and anti-depressants. Matrix's recent acquisitions may improve the complementarity to a certain extent, though. Synchronising product offerings could, therefore, be the key near-term objective. Mylan could also decide, over a period of time, to tap into Matrix's portfolio to widen its offerings.

Geographical diversification

From a Mylan standpoint, Matrix's presence in Europe through its acquisition of the Belgium-based Docpharma should enable it to enter new markets and mitigate risk through geographical diversification. The European geography is being viewed as an interesting opportunity to counterbalance the brutally competitive market in the US. Conversely, some products from Docpharma's portfolio could be taken up by Mylan for launch in the US market.

Though there was talk of Matrix divesting Docpharma's hospital equipment division, Mylan's Chief Executive, Mr Robert Coury, during the course of a conference call, stated that they would want to leverage the relationship this division shares with its franchise.

Mr Coury also remarked that Mylan would continue to "scour the landscape" for acquisition opportunities in India. With Indian pharma outfits having gone on an overseas acquisition binge in recent times, it appears that their counterparts from abroad may have just decided that it's payback time.

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