Takeda, Japan's largest pharmaceutical firm has
begun talks with two of India's biggest companies for purchasing either of
their pharma businesses. The Osaka-headquartered Takeda, which unlike rival
Daiichi Sankyo does not have a large presence in the country, has approached
Cipla, India's second-largest drug firm by market share, and Lupin, the
fifth-biggest by market share for talks.
Talks with the Mumbai-based DB Gupta-promoted Lupin have progressed beyond the initial stage. Takeda is interested in buying the domestic formulations business, along with Lupin's research facility. But the promoters are unwilling to part with the research facility and are insisting on a price that values the company at 17 times its revenue. Lupin's FY11 revenue was $1.5 billion.
India's domestic market is one of the fastest-growing markets in the world and consultant firm McKinsey & Co expects it to grow to $55 billion by 2020 from about $12 billion now. Takeda entered India late and is eager to catch up with rival Sankyo and other global pharma giants, some of whom have done big-ticket acquisitions. Last year, US-based Abbott bought Piramal Healthcare's formulations business for about 17,000 crore to become the country's biggest pharma firm by market share. In 2009, Daiichi Sankyo purchased Ranbaxy for $3.5-4 billion to become India's largest pharma player by revenue. "This is a big market for global pharma giants," said Ranjit Kapadia, Centrum Capital. Last year, Takeda appointed the former Roche executive Shankar Suryanarayanan as its India head and announced a medium range plan from 2010-12, including tie-ups with local companies.
M&A deals are very common in India's pharma market, but talks don't always lead to conclusive transactions. Last year, US giant Merck was widely believed to be in talks with Cipla, but the company denied it strongly and there was no transaction.
Talks with the Mumbai-based DB Gupta-promoted Lupin have progressed beyond the initial stage. Takeda is interested in buying the domestic formulations business, along with Lupin's research facility. But the promoters are unwilling to part with the research facility and are insisting on a price that values the company at 17 times its revenue. Lupin's FY11 revenue was $1.5 billion.
India's domestic market is one of the fastest-growing markets in the world and consultant firm McKinsey & Co expects it to grow to $55 billion by 2020 from about $12 billion now. Takeda entered India late and is eager to catch up with rival Sankyo and other global pharma giants, some of whom have done big-ticket acquisitions. Last year, US-based Abbott bought Piramal Healthcare's formulations business for about 17,000 crore to become the country's biggest pharma firm by market share. In 2009, Daiichi Sankyo purchased Ranbaxy for $3.5-4 billion to become India's largest pharma player by revenue. "This is a big market for global pharma giants," said Ranjit Kapadia, Centrum Capital. Last year, Takeda appointed the former Roche executive Shankar Suryanarayanan as its India head and announced a medium range plan from 2010-12, including tie-ups with local companies.
M&A deals are very common in India's pharma market, but talks don't always lead to conclusive transactions. Last year, US giant Merck was widely believed to be in talks with Cipla, but the company denied it strongly and there was no transaction.
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