Category — Pharmaceuticals

Bayer AG  of Germany is forming a joint venture in Mumbai with Cadila Healthcare Ltd to distribute pharmaceuticals in Indi.. Each company will hold 50 percent of the shares in the Mumbai-based venture, which will be called Bayer Zydus Pharma.  The 600 person entity will focus on women’s healthcare, diagnostic imaging, cardiovascular diseases, anti-diabetic treatments, and oncology. Bayer HealthCare AG CEO Jorg Reinhardt said that the company aims to significantly accelerate their capabilities to better serve the fast growing Indian market.

Chandigarh India based Surya Pharma’s wholly owned subsidiary, Surya Pharmaceutical (Singapore) Pte Ltd, has acquired ActivOn,  the over-the-counter analgesic drug brand in the United States, with global marketing rights for about $22 million.

Americans know Activon as the producer of aggravating television commercials.

Through the acquisition, Surya Pharma hopes to market its products in the US through ActivOn’s established marketing network, which includes leading retailers such as Walmart, Walgreen, CVS, Rite Aid, etc.

Indian companies are becoming selectively more acquisitive toward Western brands. While there are some outliers, most of the acqusitions are similar to Activon, in the sense of being under $100 million and often being perceived as undervalued. A few months earlier, Dabur based near New Delhi India purchased Namaste, based near Chicago.

Cardiac Science of Bothell, Washington  has agreed to be acquired for $2.30 per share by a medical equipment company based in Bangalore, India. The all-cash deal represents a 10 percent premium to Monday’s closing price of Cardiac Science shares, the companies said Tuesday.

Opto Circuits (India) Limited of Bangalore, which will pay $54.6 million for Cardiac Science, is a developer and marketer of healthcare equipment including pulse oximeters, patient monitoring systems, sensors, digital thermometers, anesthesia and respiratory care equipment, and stents. It reported revenues of $243 million in the latest fiscal year, and sells primarily in the US, Europe and South East Asia. Opto Circuits will fund the purchase through cash on hand and lines of credit.

Opto Circuits Chairman and Managing Director Vinod Ramnani said the deal helps his company venture into the noninvasive diagnostic monitoring and “high-growth” automated external-defibrillation markets.  “This transaction is expected to open many new global markets for Cardiac Science’s products and will greatly enhance Opto Circuits’ product offering and presence in the United States,” Ramnani asserted.

While companies from India are getting ambitious about M&A in the West, they continue to be value-seekers as we see in this deal to buy a distressed medical device company. Earlier this year, the company agreed to replace 24,000 AEDs for U.S. medical facilities and emergency services under a revised recall plan the company has negotiated with the U.S. Food and Drug Administration.  So don’t expect a wave of such buyouts in the next quarter.

American investors should well be aware of the emerging economies growing rapidly on the continent of Africa. Indian industry has already put into action a collaborative effort with the national government to develop strategies toward competing with China and European nations for capturing these business growth opportunities, particularly in East Africa.

India’s Commerce and Industry Minister Anand Sharma accompanied a delegation representing 187 Indian companies to “Namaskar Africa,” meetings held October. 14-15 in Nairobi, Kenya. This event involves a series of opportunities promoting India-Africa business networking organized by the Federation of Indian Chambers of Commerce and Industry (FICCI).

Part of the strategy has Sharma meeting with the top Kenya government representatives – President Mwai Kibaki and Prime Minister Raila Odinga. Additionally, FICCI President Rajan Bharti Mittal, vice chairman for Bharti Enterprises, leads the Indian business delegation that has expressed a strong interest toward developing telecom business opportunities in Africa.

India currently experiences bilateral trade of $30 billion throughout Africa. Efforts are underway to expand trade into East Africa where trade revenue is much lower at $4 billion. The countries with representatives meeting with Indian counterparts include Uganda, Ethiopia, Rwanda, Kenya and Seychelles.

A challenge toward successfully competing has brought together both industry and government leaders in India in order to devise a plan that will “level” the field. In a study released by FICCI, one strong competition challenge presents itself because Chinese companies are government-owned with far greater capital at hand for investment than any privately owned Indian companies. According to the report India is attempting to counter the offers from Europe and China by extending credit lines to African companies. “This will help source capital goods from India,” Mitra said in the report.

Africa has experienced  5.4 percent economic growth throughout the past decade and the outlook is rapidly improving. The FICCI report further states that: “For the first time in over three decades, a large number of African countries have begun to show sustained economic growth at the rates that are similar to the rest of the developing world and exceed that of most of the developed countries. The study discovered several areas of opportunity for Indian companies in addition to telecom including healthcare and pharmaceuticals, road and railway construction, general construction, power and mining.

India is one of the  fastest growing pharmaceutical  markets in the world generating almost $8 billion per year. That amount is more than expected to double by 2015 with annual growth from 15 to 20 percent.

Following the acquisition of India’s pharma leader Ranbaxy Labs by a Japanese company, the India Expert was not surprised when Illinois-based Abbott Laboratories moved to acquire Piramal Healthcare’s generic drug unit, a comprehensive manufacturing and distribution asset that services  antibiotics, respiratory, cardiovascular, pain and neuroscience segments. This investment makes Abbot the No. 1 producer with annual sales garnering a seven percent market share that is predicted to pass $2.5 billion by the year 2020.

Abbott is no stranger to investing in emerging markets, evident by its recent addition of Established Products Division, created as a stand alone entity where focus is placed upon emerging global markets with its leading cache of branded generic products which perform particularly well in markets such as India. Branded generics account for 25 percent of worldwide pharmaceutical sales. Pirarmal  sales for the fiscal year ending in March 2010 exceeded $500 million.

Furthermore, Abbott’s investment combines its own 100-year presence in India with Pirarmal’s personnel creating the largest pharmaceutical sales force in the country with representatives dedicated toward servicing India’s massive rural areas that constitute 70 percent of the nation’s population.

According to a press release by Abbott ‘s chairman and chief executive officer, Miles D. White, “This strategic action will advance Abbott into the leading market position in India, one of the world’s most attractive and rapidly growing market. Our strong position in branded generics and growing presence in emerging markets is part of our ongoing diversified pharmaceutical strategy, complementing our market-leading proprietary pharmaceutical offerings and pipeline in developed markets.”

The sale represents a total $2.2 billion investment in the India pharmaceutical market.  Readers should watch out for additional M&A moves involving Indian targets or acquirers.