The great dream of Indian pharmaceutical sector capturing a major share of the global pharmaceutical market has ended. No more acquisitions by Indian companies are being attempted in the US and Europe for some time now. Generic export to the developed markets is no more highly profitable. In fact, the retreat has begun after a number of acquisitions of leaders of Indian pharmaceutical industry started faltering since 2007. Now multinationals are back in India with a vengeance capturing the same captains who ventured out in the US and Europe a few years ago. Acquisition of India’s largest pharmaceutical company, Ranbaxy Labs by Daiichi, the Japanese pharmaceutical giant, in 2008 was the first signal. It was a shock to some among the Indian pharmaceutical sector because the founder of the Ranbaxy was one of the architects of national sector of pharmaceutical industry. Now the domestic business of Piramal Healthcare was bought over by Abbott at a fancy price. With this acquisition, it is claimed that Abbott will have a 7 per cent market share in the domestic pharmaceutical business. That is quite substantial and makes it the number one player. What is intriguing in this deal is the valuation the Piramal Healthcare got. A value of 3.72 billion dollars is quite stunning considering its current sales. For Abbott, it may be a well calculated investment for the future considering the fast growing domestic market with hardly any price control.

Abbott’s deal has some significant fallouts. The tempting valuation the Piramal Group got has certainly motivated other major players in this business to sell off their companies for a price like that. Time can only tell which company will be acquired by which MNC. But that is certainly happening. The next generation which is waiting to take charge of India’s remaining top companies do not have any concerns like the founders of Indian pharmaceutical sector had. For multinationals, acquisitions in emerging markets like India have become a necessity for their survival. Most of their patented products are expiring in the next couple of years. The research pipelines are drying up. New molecular research is not going to yield much results in the near future. And the drug regulators in the US and Europe are becoming extremely stringent in clearing whatever new drugs. All these will have serious impact on the profitability of big pharma and they have to act fast. MNCs have thus realized the hard truth that the generics is the business of tomorrow and they should capitalize on it now. And India has strong generic players supplying quality products to the global markets. Now what is worrying the Indian government is the resurgence of the MNCs in the domestic market. It had taken some years in the past to eliminate the domination of MNCs in the domestic pharmaceutical market. Now that threat is back with a bang. How to ensure fair price for drugs of mass consumption is a question which has no convincing answer. Price control is just not effective and a number of patented and generic products belonging to various therapeutic groups are already beyond the reach of common man.