The latest report on “Pharmaceutical M&A in the Asia Pacific Region” reveals that emerging regional giants China and India are outpacing developed neighbors Japan and Australia in company mergers and acquisitions (M&A). The rapid growth of the pharma markets in these countries means that domestic consolidation is high, but foreign companies and multinational corporations are also buying up big, as they try to offset future losses from impending patent expiries, and slowing growth in major world markets.

Healthcare and pharma companies from China were involved in 32 percent of all M&A deals analyzed between Q1 2007 and Q1 2010, which was the highest share of transactions recorded in any Asia Pacific country over the period analyzed. M&A activity involving Indian companies accounted for 31 percent of all 400 transactions analyzed in the region.

APAC offers significant advantages to companies pursuing growth prospects through geographic expansion. Not only is the region home to the second largest pharma market in the world, Japan, but the highly populous emerging APAC markets are characterized by burgeoning middle classes with cash to spend on high quality, branded healthcare and pharma products. Countries with particularly high pharma market growth include China, India, Vietnam, Thailand and Indonesia.

“Japanese companies continue to dominate the highest value transactions, recording numerous multi-billion dollar deals between 2007 and 2010, but Chinese and Indian companies have been more acquisitive”, explains Ms Erin Brady, healthcare analyst at Datamonitor, and author of the report. “While China continues to pursue primarily domestic deals, India has opened up to international investment opportunities more rapidly.”

A common strategy for pharma companies penetrating the emerging Asia Pacific markets is the acquisition of local manufacturers or generics firms that currently dominate these markets, as they can provide a quick, cost-effective point of entry from which to later launch more expensive branded products. Companies from the US were the most common acquirers and targets outside Asia Pacific, but big and small companies from a wide range of countries and continents were also involved in Asia-Pacific healthcare and pharma M&A during the period analyzed.

“M&A in Asia Pacific is expected to increase throughout the remainder of 2010, provided the world economic climate remains stable and governments in developing Asia Pacific nations continue to push ahead with ongoing healthcare reforms and regulatory policy reviews,” concludes Ms Brady.