Market interest in India’s pharma companies is on the climb again

Given that India is forecast to overtake China in terms of total population imminently, it’s no surprise to see that pharmaceutical conglomerates around the world have looked in recent times to the country for their next big deals.

In 2010 Indian target companies in the pharmaceutical industry were the subject of over $5.1bn worth of deals from acquirers that included Abbot Laboratories, Reckitt Benckiser and Pfizer, amongst other big industry names and global private equity players. That level of deal activity in 2010 saw India surpass the usual suspects – Switzerland, France, Germany and even China – countries that are always popular in terms of deals involving pharma companies.

2011 has so far been very quiet in comparison, with only $56m worth of deals involving Indian pharma companies announced so far. However, all that appears to be about to change with two potential deals hitting headlines in as many days.

Yesterday Reuters broke news that Aventis Pharma (a subsidiary of Sanofi) is on the verge of signing a deal worth over $100m for the over the counter (OTC) business unit of Universal Medicare. This was followed this morning by news that Japan’s Takeda Pharmaceutical is in talks with Cipla and Lupin, the Indian generic drug makers, about buying one of the two companies.

This deal would not be the first time that a large Japanese pharma company has dipped its toe into the Indian market. Back in late 2008 Daiichi Sankyo acquired a majority shareholding in Ranbaxy Laboratories, the Indian generic drug maker, for over $1bn, but the deal was not as successful as had been hoped due to legal issues that later arose following a ban on some of the Ranbaxy products.

Let’s hope that these two potential deals provide sweeter medicine for their acquirors.