NYSE-listed pharma major Abbott Labs has inked a deal with Piramal Healthcare to acquire Piramal’s Healthcare Solutions business. Abbott to Become No. 1 Pharmaceutical Company in India with Acquisition of Piramal’s Healthcare Solutions Business. May 21, am. N) will pay $ billion to acquire the branded generics business of Piramal’s healthcare solutions accounted for about 55 percent of its.

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At the same time, hopes have receded of a wholly Indian pharmaceutical major emerging as a global player. According to Wharton faculty and industry experts, changing global business models and the resources needed to develop blockbuster drugs are propelling Indian companies to join forces with multinationals through strategic alliances or as targets for acquisitions.

Based in Abbott Park, Ill. The Abbott-Piramal combine reports to him, but he notes it will be run as a standalone business unit after the merger takes effect later this year. The Abbott-Piramal deal is the latest in a wave of consolidation within the global pharmaceutical industry over the past few years.

Wharton management professor Pifamal Chaudhuri says the relatively higher valuation makes sense for Abbott. On top of that, India is a growing market. Globally, Abbott also faces the pressure of playing catch-up with its bigger rivals. Wharton professor of healthcare management Patricia Danzon agrees.

There ahbott a limited number of Indian generics companies that are attractive, and there might be considerable competition for them. Abbott has been operating in India for of its years, and has popular pharmaceutical brands including the antacid Digene and painkiller Brufen. It will, however, continue research in drug discovery through an affiliate company. Piramal Healthcare also retains custom manufacturing, over-the-counter consumer products, diagnostic medical devices and services abbottt clinical research, among other activities.

Indian companies can hope to become truly global pharmaceutical companies only through drug discovery, says Piramal.

Now, Piramal on its own has that opportunity. Increased funding expands the scope for drug research, but that alone is not enough; other pieces have to fall in place, Piramal notes. You scquisition to create a whole organization, and that takes time.

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In fact, 10 days before the Piramal pitamal, Abbott announced a licensing and supply deal with Indian pharmaceutical company Zydus Cadila. It allows Abbott to commercialize two dozen Zydus Cadila drugs in 15 emerging markets. The collaboration includes medicines for pain, cancer and cardiovascular, neurological and respiratory diseases, with product launches beginning in Abbott and other Big Pharma companies face the twin challenges of slow growth in the developed markets and maturing product pipelines that are getting harder to replenish halthcare newer, blockbuster drugs, according to Chaudhuri.

In the past few years, they have realized that those pipelines are running dry, and are trying to diversify.

Unlike other pharmaceutical acquisitions that have been targeted at buying Indian generic capacity to service Western and emerging markets, the Abbott-Piramal deal is primarily focused on the domestic market, according to Mumbai-based business magazine Business India.

India certainly offers a large and growing domestic market with rising incomes and increasing health insurance coverage, says Danzon. The potential to expand with very high priced specialty products is seriously limited.

Food and Drug Administration charged the Indian company with numerous violations on quality and safety fronts, and banned some of its drugs. That is one reason pharmaceutical multinationals are abboft deals with the relatively small number of well established Indian companies that have met international standards in manufacturing.

Several other deals occurred over the past one year. All the same, the West continues to dominate pharmaceutical innovation, and companies in India and other emerging markets could play a supportive role, according to Danzon. Chaudhuri acknowledges those new realities, but with a patriotic tinge.

These other players are not even interested in doing that. The earlier regime recognized patents pira,al pharmaceutical processes but not on pharmaceutical products, allowing companies to reverse-engineer copies of the branded and patented drugs of western companies. It makes a lot of sense if they can pull off all the integration issues. However, companies like Abbott and others getting into new generic drug markets must be watchful of the changing lay of the land there as well, according to Danzon.


Danzon points to Dr. Danzon adds that the emerging business plan for generics companies is essentially around selling to pharmacists, not physicians. For consumers, the great value in generics is getting it cheaper.

A key differentiator here is that unlike in the U. But that is also changing, she says. Mexico, for example, is in the process of changing its regime to require generics to be bioequivalent, she says.

Abbott buys Piramal’s pharma arm for $bn – Times of India

It is not so much a concern about the downside, but about how we maximize the opportunity. Many view private equity firms as villainous actors intent on the singular goal of profit.

But new Wharton research provides better insight into the benefits of PE buyouts. Globalization is not just for manufacturers. It is increasingly a preferred choice for infrastructure and real estate developers as well. This is no different for Chinese firms.

Abbott Completes Acquisition of Piramal’s Healthcare Solutions Business

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Additional Reading Management Finding the Virtue in Private Equity Firms Many view private equity firms as villainous actors intent on the singular goal of profit. Innovation From Book to Bank: Growth Through Overseas Expansion Globalization is not just for manufacturers. Sign up for the weekly Knowledge Wharton e-mail newsletter, offering business leaders cutting-edge research and ideas from Wharton faculty and other experts.