Indian pharma companies are aggressively expanding in the US through strategic acquisitions. This surge in mergers and takeovers helps them hedge against market uncertainties and regulatory challenges. Leading firms such as Sun Pharma, Syngene, Senores, and Zydus are at the forefront of this expansion.
Key Drivers Behind the Acquisition Wave
Industry analysts link this trend to the need for scaling operations, optimizing costs, and maintaining profitability under stringent USFDA regulations. The rising demand for biosimilars and specialty drugs has also encouraged companies to move beyond traditional generics. According to Vivek Padgaonkar, Independent Director at ENTOD Pharmaceuticals, Indian firms have gained confidence in navigating the USFDA’s regulatory framework. He points out that diversifying product portfolios has made it easier for companies to grow through acquisitions.
Major Acquisitions in the US Market
Sun Pharma’s $355 million acquisition of Checkpoint Therapeutics exemplifies this strategy. With this purchase, Sun Pharma strengthens its oncology and immunotherapy portfolio. Vivek Tandon, VP at Primus Partners, and Nilaya Varma, CEO and Co-Founder of Primus Partners, emphasize that such acquisitions position Indian firms to capitalize on the US patent cliff. As blockbuster drugs lose patent protection, Indian companies can launch generics and gain first-to-file exclusivity.
Market Pressures and Cost Optimization
Large Group Purchasing Organisations (GPOs) and Pharmacy Benefit Managers (PBMs) continue to squeeze supplier margins. To counteract these pressures, Indian pharmaceutical firms are leveraging mergers and acquisitions to scale up, optimize costs, and sustain profitability. Hari Kiran Chereddi, MD and CEO of HRV Global and NHG Pharma, notes that these acquisitions enable firms to enhance their operational efficiencies.
Strengthening Supply Chains Post-COVID
The pandemic exposed vulnerabilities in global supply chains, pushing Indian companies to secure their API production and backward integrate their operations. Acquiring Contract Development and Manufacturing Organisations (CDMOs) or Contract Manufacturing Organisations (CMOs) has become a core strategy. Chereddi likens this approach to India’s IT industry’s expansion two decades ago, where firms acquired US-based companies to solidify their presence.
Challenges in Acquiring US-Based Firms
While owning a US manufacturing facility offers advantages, it does not eliminate regulatory challenges. Even domestic plants must comply with strict FDA regulations. Additionally, US pharma assets often command premium valuations, making acquisitions expensive yet strategically vital. Chereddi highlights integration challenges, including cultural differences and operational adjustments, which can slow synergy realization. Moreover, despite increased sales, intense competition in the US generics market often squeezes profit margins.
Navigating Regulatory and Financial Risks
Indian firms must also address compliance risks, as regulatory issues such as warning letters and approval delays can disrupt business operations. Padgaonkar warns that many deals involve high debt, which can strain financial health and limit future investment opportunities. As reported by thehindubusinessline.com, as price erosion continues in the US generics market, companies must strike a balance between expansion and profitability to sustain long-term success.
