Updated on 28 March 2014
Analysis firm Deloitte mentions that weak pipelines and diversification strategies to counter the threat of generic competition are driving life sciences merger and acquisition activity. "Mergers, consolidations,
and alliances will continue to transform the global life sciences market. With low interest rates and considerable cash on hand, global pharma players are penetrating burgeoning emerging markets by acquiring domestic generic manufacturing companies," according to a report by Deloitte.
Strategies of Big Pharma
Well-established global pharmaceutical brands focused their regional investment strategies in this region to leverage the strengths of the emerging economies and also tap the growing local markets. Acquisitions or alliances provide them easier access to the local market through pre-established markets and facilities. GlaxoSmithKline (GSK), Pfizer, Novartis, and Sanofi Pasteur are among the top pharma giants who have established strongly in Asia by acquiring the domestic companies.
In the last five years, GSK has made aggressive investments by building alliances with regional companies such as Japan-based JCR Pharmaceuticals, Korea-based Dong-A Socio Holdings, China-based Nanjing MeiRui Pharma and with Shenzhen GSK-Neptunus Biologicals. GSK' strategy has been to grow a diversified global business in pharmaceuticals research and manufacturing with direct presence in the target market.
Similarly, Pfizer has made investments in India by acquiring more than 30 percent stake in Pfizer India, to strengthen its India presence. The company also ventured into India's animal health market by acquiring India-based Ventnex Animal and Pfizer Animal Pharma. Novartis reinforced its vaccine capabilities in Asia by acquiring a majority stake in China-based vaccine firm Zheijang Tainyun Biopharmaceutical for epidemic hemorrhagic fever and influenza and India-based manufacturer of anti-rabies vaccine Chiron Behring Vaccines. Sanofi in order to complement its existing R&D strength acquired India-based Universal Medicare's marketing division and Dosh Pharmaceutical's animal division.
"It is likely that many pharma companies will consider restructuring in order to regain their industry dominance. They need to explore options for mergers and acquisitions and/ or execute license deals in order to survive in mature markets and access emerging markets. Meanwhile, generic drug manufacturers will continue to move up the value chain to expand their market share taking advantage of the patent cliff and pricing pressures," said Mr Abhijit Ghosh, pharmaceutical and health- care leader, PwC Singapore.