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Abbott to Become Biggest Pharma Company in India
Abbott announced a definitive agreement with Piramal Healthcare Limited to acquire full ownership of Piramal's Healthcare Solutions business (Domestic Formulations), a leader in the Indian branded generics market, for an up-front payment of $2.12 billion, plus $400 million annually for the next four years, giving Abbott the No. 1 position in the Indian pharmaceutical market. This further accelerates Abbott's emerging markets growth following the recent acquisition of Solvay Pharmaceuticals and announcements last week of Abbott's collaboration with Zydus Cadila as well as the creation of a new stand-alone Established Products Division to focus on expanding the global markets for its leading branded generics portfolio.
"This strategic action will advance Abbott into the leading market position in India, one of the world's most attractive and rapidly growing markets," said Miles D. White, chairman and chief executive officer, Abbott. "Our strong position in branded generics and growing presence in emerging markets is part of our ongoing diversified pharmaceutical strategy, complementing our market-leading proprietary pharmaceutical offerings and pipeline in developed markets."
"Emerging markets represent one of the greatest opportunities in health care – not only in pharmaceuticals – but across all of our business segments. Today, emerging markets represent more than 20 percent of Abbott's total business," said Mr. White.
"With this deal, the combined Healthcare Solutions and Abbott businesses will become the clear market leader in India, with a market share of approximately 7 percent," said Ajay Piramal, chairman, Piramal Group. "This was our collective vision and I am glad that those who are part of Piramal's Healthcare Solutions business will realize this dream."
The Indian Pharmaceutical Market
India is one of the world's fastest-growing pharmaceutical markets, due in large part to branded generics. The market will generate nearly $8 billion in pharmaceutical annual sales this year, a number that is expected to more than double by 2015. Abbott estimates the growth of its Indian pharmaceutical business with Piramal to approach 20 percent annually, with expected sales of more than $2.5 billion by 2020.
Branded generics have significant brand equity in many international markets, providing durable, sustainable franchises for future growth. Piramal markets the products in its Healthcare Solutions business in India only and does not market traditional generic products. Today, branded generics account for 25 percent of the global pharmaceutical market, have the majority of market share in the largest emerging markets, and are expected to outpace growth of patented and generic products.
The Mumbai-based Piramal Healthcare Solutions business has a comprehensive portfolio of branded generics with annual sales expected to exceed $500 million next year in India, and market-leading brands in multiple therapeutic areas, including antibiotics, respiratory, cardiovascular, pain and neuroscience. This business grew 23 percent in 2010 (fiscal year ended March 31, 2010), faster than the market in India. Piramal has a strong commercial presence, including the largest sales force in India with a unique model that includes dedicated sales personnel in rural areas inhabited by 70 percent of the population. The combined Abbott and Piramal sales forces will be the industry's largest in India.
Piramal's Healthcare Solutions business will become part of Abbott's newly created, stand-alone Established Products Division. Piramal's Healthcare Solutions business employs more than 5,000 people in India. Abbott, which is celebrating its 100th year in India, has more than 2,500 employees across all of its businesses there.
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