B&E: Sector wise breakup of M&A deals in India for Q1 2011 shows that healthcare accounted for 25% of the total deal value. What were the possible factors favouring this sector?
AS: One of the major factors behind this is the population (currently 1.2 billion). By 2030, India is expected to overtake China as the world’s most populous nation. As the middle class rises, opportunities in healthcare will also improve. Increased liberalization has allowed additional opportunities to emerge such as the private insurance market.
B&E: What are the various challenges with East-West alliances, and do India to India mergers make better sense?
AS: There are some normal cultural and regulatory challenges associated with all cross-continental M&A deals. Drivers for M&A remain the same, whether East-West or domestic – access to innovation and R&D capabilities, reducing cost structures and improving manufacturing capabilities, entering new markets and product/service categories. MNCs have turned to Indian pharma companies for a combination of these factors – MNC-India pharma partnerships work well due to synergies obtained by both parties from leveraging different strengths across the drug development life cycle from R&D and manufacturing (typically strong in India) through sales and distribution (typically strong in US/EU).
B&E: Will pharma companies continue to pursue acquisitions of innovative biotech products and companies in future? If yes, what would be your suggestions for such deals?
AS: India’s high skill resource pool and comparatively low costs make it an attractive base for pharma players looking to add biotech/vaccines to their portfolio. The biotech sector is expected to touch $10 billion by 2015, with revenues of $4 billion in 2010-11, and a 33% growth yoy. Although a relatively smaller sector currently, India’s biotech role will mature in the global market as the standard of living, knowledge base and the cost of doing business increase. One way of maintaining the cultural integrity of the acquired biotech firm is by allowing them to function as a separate company, while at the same time streamlining shared services to reduce operational costs.
AS: One of the major factors behind this is the population (currently 1.2 billion). By 2030, India is expected to overtake China as the world’s most populous nation. As the middle class rises, opportunities in healthcare will also improve. Increased liberalization has allowed additional opportunities to emerge such as the private insurance market.
B&E: What are the various challenges with East-West alliances, and do India to India mergers make better sense?
AS: There are some normal cultural and regulatory challenges associated with all cross-continental M&A deals. Drivers for M&A remain the same, whether East-West or domestic – access to innovation and R&D capabilities, reducing cost structures and improving manufacturing capabilities, entering new markets and product/service categories. MNCs have turned to Indian pharma companies for a combination of these factors – MNC-India pharma partnerships work well due to synergies obtained by both parties from leveraging different strengths across the drug development life cycle from R&D and manufacturing (typically strong in India) through sales and distribution (typically strong in US/EU).
B&E: Will pharma companies continue to pursue acquisitions of innovative biotech products and companies in future? If yes, what would be your suggestions for such deals?
AS: India’s high skill resource pool and comparatively low costs make it an attractive base for pharma players looking to add biotech/vaccines to their portfolio. The biotech sector is expected to touch $10 billion by 2015, with revenues of $4 billion in 2010-11, and a 33% growth yoy. Although a relatively smaller sector currently, India’s biotech role will mature in the global market as the standard of living, knowledge base and the cost of doing business increase. One way of maintaining the cultural integrity of the acquired biotech firm is by allowing them to function as a separate company, while at the same time streamlining shared services to reduce operational costs.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
