Asia Pharmaceutical – Merger & Acquisition
As the pharmaceutical sector battles against patent expirations, decreasing drug approvals and slowing sales, merger and acquisition is the answer to maintain the growth rate of large pharmaceutical companies. Over the past few years, we have witnessed many blockbuster M&A and this number is projected in years to come.
Between 2008 to 2012, the focus of pharmaceutical M&A are in India and China. While the total value of M&A deals targeting companies in Asia Pacific region has seen a drop of 43.8% from 2008 to 2009, the opposite is observed in India and China. As the global pharmaceutical sector shift their focus towards India and China, the number of M&A deals in India and China itself accounts for more than 60% of the deals in the Asia Pacific region.
Japanese drug maker Daiichi Sankyo’s US$4.6 billion acquisition of India pharmaceutical giant Ranbaxy back in 2008 seemed to be the deal that marks the start of the M&A frenzy in the Asia Pacific region. Following that acquisition, we witness many blockbuster acquisitions in the region. The acquisition of Indian pharmaceutical company, Piramal Healthcare by Abbott for US$3.7 billion and the US$1.16 billion acquisition of China’s CSPC NBP Pharmaceutical by China’s CSPC Pharmaceutical in 2012 are some of the examples.
However in 2012, Southeast Asia region seemed to have become the next hotspot for pharmaceutical M&As, with Singapore and Malaysia leading in terms of M&A deals. In 2012 itself, Singapore recorded US$49.9 million worth of M&A deals and Malaysia recorded US$22 million worth of M&A deals. Yet, the biggest winners of 2012 M&A are still India and China. India recorded a total of 31 M&A deals accounting to US$1.7 billion while China registered a total of 132 M&A deals accounting to US$5.2 billion.
Multinational pharmaceutical organizations looking to enhance their growth should start looking into M&A hotspots like India and China. Furthermore, the Southeast Asia region also promises strong growth potential with many emerging countries such as Myanmar, Vietnam and Indonesia in the region. With many patent deals expiring, pharmaceutical giants should be targeting pharmaceutical companies that have high number of drug patents and market share in their respective countries.
- What are the key acquisition targets in the respective countries in the Asia region?
- How can an acquisition help in our organization’s growth specifically?
- How successful was the M&A deals in achieving its original objective for the organization?
- What are the possible negative repercussions of M&A?
- Which countries promise a positive outlook in the pharmaceutical sector in the next 5-10 years?
- Are there other alternatives available instead of entering into an M&A deal?
- What are the potential M&A deals in the next 5 or 10 years?