US drug maker Abbott Laboratories has agreed to pay-$3.7 billion or Rs 17,000 crore-to buy the domestic formulations business of Piramal Healthcare in a scramble among global pharmaceutical companies to get a foothold in a promising market. Abbott, which is celebrating its 100th year in India and owns such brands as Creamffin, Brufen and Digene, will make an upfront payment of $2.12 billion to the Ajay G. Piramal-led firm, apart from $400 million annually for four years, the two companies said.
Abbott estimates the growth of its pharmaceutical business in India after the Piramal acquisition to touch 20 percent annually and log $2.5 billion by 2020. The Piramal group’s turnover across several business had exceeded $1 billion in 2009-10. India is one of the fastest-growing markets in pharma, largley because of generics, with revenue projected at $8 billion this year for the industry overall.”This strategic action will advance Abbott into the leading market position India– one of the world’s most attractive and rapidly growing markets,’ said Miles D. White, chairman and chief executive officer of Abbott.
India became a generics powerhouse because of a 1972 decision by then Prime Minister Indira Gandhi not to recognize patents on drug products. That allowed Indian companies to legally copy expensive branded drugs as soon as they came to market, provided they manufactured the drugs in a novel way. India ended its copycat generics edge in all but exceptional cases in 2005, when it implemented a World Trade Organization guarantee of 20-year patents on new drugs. But the nation’s drug makers still produce roughly one-fifth of the world’s generics, according to PricewaterhouseCoopers. drug makers still produce roughly one-fifth of the world’s generics, according to PricewaterhouseCoopers. The deal with Abbott, which is still subject to shareholder approval, leaves Piramal Healthcare to re imaging its future.