Warning of significant takeover threats for most Indian drugmakers by their large foreign peers, an inter-ministerial task force has suggested the government act proactively to strengthen the pharma industry.
"(The) Indian pharmaceutical industry being fragmented with small balance sheet sizes, takeover by global pharmaceutical companies would adversely affect the health interests of the nation," the task force has said in its recommendations to the commerce ministry.
"India is exposed to the threat of takeovers from global big pharmaceutical companies under the new IPR regime," it noted. The task force was set up under the aegis of the commerce ministry for suggesting "Strategy for Increasing Exports of Pharmaceutical Products".
According to industry experts, there are more than 10,000 drug manufacturers in the country and most of them are small-sector units operating in the generic segment.
With a large number of drugs going off-patent in developed markets like the US and Europe, Indian companies are expected to garner a lion's share in the segment.
According to the report, drugs worth 40 billion dollars in the US and $25 billion in Europe are expected to go off-patent soon and this opens a vast opportunity for the domestic industry.
Pharma MNCs are now focusing more on generics and taking over Indian companies would help them in leveraging the competitive price advantage offered in this country, the task force said.
The task force also suggested that there is a need to promote internal consolidation and develop stronger companies that have width and depth in market access, manufacturing and R&D.
Last year, two big Indian pharmaceutical companies were acquired by multinationals and some more firms are likely to be bought by foreign entities.
Gurgaon-based Ranbaxy Laboratories Ltd was acquired by Japan's third-largest drug maker Daiichi Sankyo for Rs 22,000 crore (Rs 220 billion). Similarly, another Delhi-based oncology player Dabur Pharma was acquired by Singapore-based Fresenius Kabi for over Rs 1,000 crore (Rs 10 billion).
"It is a promising sector and the government is concerned over the shifting of ownership of Indian entrepreneurship," Indian Pharmaceutical Alliance director general DG Shah told PTI.