Top global pharma deals in recent times - Chart Of The Day 28 July 2015 - Equitymaster
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Top global pharma deals in recent times

On This Day - 28 July 2015
« Top global pharma deals in recent times

In one of our recent editions of the 5 Minute WrapUp, we had discussed how Indian pharma companies have been looking to grow globally through the inorganic route. And now there is one such big ticket acquisition announcement that has come from the world's largest generic company, Teva Pharmaceuticals. The company has acquired the generic drug business of Allergan Plc for a huge US$ 40.5 bn! This makes the deal one of the largest in recent times in the global pharma space. Today's chart of the day shows the largest deals in the global pharmaceutical space in recent times.

This deal will further strengthen Teva's position in the global markets, as it gives the company a way bigger gap as compared to Sandoz, the second largest generics maker, and much larger scale of operations. Also, as reported by Reuters, this business is seen as a better fit than Mylan's (the company Teva was pursuing earlier this year) as it would improve Teva's distribution channels and access to profitable injectable drugs.

As reported, Teva earns about 60% of its revenues from the American market. Lupin and Sun Pharmaceuticals earn about 45% and 50% revenues from the US market.

Is this deal likely to impact Indian payers? Lupin does not seem to believe so as they believe that this would rather impact the smaller players who are aiming to get a bigger pie of the US market.

As the M&A activity (written in more detail in today's edition of the 5-Minute Premium) has been heating up globally, the M&A activity in the Indian pharma space has been on the rise in recent times, albeit on a much smaller scale. As the global pharmaceutical Industry is undergoing a paradigm shift, the pharma companies have opted for the inorganic route to sustain their growth trajectory. With this increase in M&A activity, the question also arises whether there could be a probability of Indian pharma companies being targeted by such pharma biggies?

Now this is where the Indian pharma capabilities come into play. Abbott's acquisition of Piramal's domestic pharma business, Fresenius Kabi's acquisition of Dabur's oncology businesses are some classic examples. Robust portfolios helped these Indian companies fetch premium valuations. Hence, Indian companies which have strong product portfolios, lucrative product pipeline, low cost manufacturing abilities, low compliance issues in their manufacturing facilities and are approved by developed agencies, can become potential targets by these global pharma biggies.

Data Source: Business Standard, Thomson Reuters;
*-consumer care business; #-Non-US markets

This Chart Of The Day was published in The 5 Minute WrapUp - Will the global deflation affect your stocks?
 
 
 
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