Indian pharmaceutical companies and sector experts do not expect a downside for Indian drug makers, following Teva’s $40-billion acquisition of Allergan.
Jerusalem-based Teva was the world’s largest generic drug maker by sales in 2014. Like top Indian firms, Teva earns about 60 per cent of revenue from the American market. A little over half its revenue comes from sale of generic drugs and 38 per cent from speciality products.
While the deal will change the competitive landscape among generic drug makers and enable Teva to increase leadership over number two company Sandoz by a wide margin, it would not lead to an adverse impact for Indian companies, say analysts. “We don’t see the deal impacting the top three Indian generic drug majors. It is part of the rapid consolidation within the global generic pharma industry over the past two years. It could impact mid-to-small generic makers globally, competing for a share of the US generics market,” said Lupin spokesperson Shamsher Gorawara.
Last week, Lupin bought US generic drug maker GAVIS in an $880-million deal to consolidate its presence in the US market. Lupin earns about 45 per cent of its revenue from the US; Sun Pharma gets half its revenue from that market.
“Indian firms enjoy a cost advantage over foreign peers and that will not go away. Consolidation will ease pricing pressure in the generic market and in the medium to long term, this will improve the margins,” said Sarabjit Kour Nangra, vice-president at Angel Broking.
“I do not see a significant impact on Indian companies because of Teva's acquisition. Teva might have to divest some of its drug portfolio to secure regulatory approvals for the transaction and this actually opens opportunities for Indian companies,” said D G Shah, secretary general of the Indian Pharmaceutical Alliance.