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Pharma: A fragmented industry consolidates - Views on News from Equitymaster
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  • Sep 28, 2000

    Pharma: A fragmented industry consolidates

    The pharmaceutical industry is one of the most fragmented industries in India. There are almost 20,000 manufacturers catering to the $ 3.1 bn Indian market. However, the impending changes in the patent law seems to galvanised the industry into action.

    The industry is witnessing a consolidation phase with Indian pharma companies increasingly looking at stepping up growth by acquiring companies/brands. Simultaneously, bulk drug capacities are being hived off. MNC companies are also willing to hive off their tail end brands and focus on products/therapy areas of the future including respiratory, anti–virals and cardiovascular.

    Over the last three years the number of deals of brands/companies changing hands has gone up manifold. While the buyers have been the relatively bigger Indian players such as Ranbaxy, Dr. Reddy’s, Wockhardt and Nicholas Piramal, the sellers have been either MNCs such as Glaxo, Hoechst or the smaller players such as Lyka Labs, Dai Ichi Karkaria, Sol Pharma, American Remedies etc.

    Brand Buyer Seller
    Epilex Knoll Pharma Reckitt & Colman
    Riflux, Clamp Dr. Reddy's Sol Pharma
    Becelac Dr. Reddy's Pfimex
    Mox Ranabxy Gufic Labs
    Natamox, Coldact, Splanz, Zofer Sun Pharma Natco Pharma
    Omnatax, Haemaccel Nicholas Piramal Hoechst Marion
    Annovate, Derobin US Vitamins Glaxo
    Macraberin, Multivite FM Universal Medicare Glaxo
    Burnol Reckitt Knoll Pharma
    Dinoripe Gel, Deviprost, PG Tab Dr. Reddy's Dai Ichi Karkaria
    Alex Glenmark Pharma Lyka Labs

    Another factor leading the change is the impending merger of international giants. This would lead to further lead to consolidation among the MNC’s themselves. For instance while Glaxo–SmithKline and Aventis would be big players in the prescription products, Pfizer would dominate the over the counter markets for products such as cough syrups.

    The third factor leading to a consolidation are the co–marketing alliances among similar sized companies. For instance Ranbaxy and Glaxo have a co–marketing alliance for the anti–biotic cephalexin. Similarly Glaxo and Lupin have a co–marketing alliance for their anti–TB products. The co–marketing alliances would further consolidate the hold of the established players in the market.



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