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Avendus Pharmaworld –April 2010
Contents
Domestic Deal round up FY10 Pg 2 Dear Readers,
Global Deal round up FY10 Pg 5 In this edition of the newsletter, we bring you the highlights of the M&A and
private equity deals life‐sciences – globally and in India in FY10. We also bring you
Valuation snapshot Pg 10
a special focus on the top‐10 deals in the sector.
NewsLine Pg 11 FY10 was a mixed year for M&A in Indian life‐sciences. While on the face of it, the
overall value of M&A deals went up to USD 2.17 billion from USD 1.26 billion in
FY09, the true value of M&A deals in FY10 amounted to USD 1.54 billion after one
notable exclusion – the USD 625 million deal involving the acquisition of the
Merieux Alliance’s 80% stake in Shantha Biotech by
Sanofi Pasteur. Albeit the
Contacts: “object of the deal” was an Indian company, the deal was essentially struck
between the Paris‐based Merieux Alliance and Sanofi. The total value of inbound
V.Krishnakumar deals excluding the Shantha deal amounts to USD 0.52 billion. The dominant
Krishna.kumar@avendus.com theme in inbound deals was the acquisition of Indian development/
manufacturing capabilities by global generics players, with the USD 400 million
Yogesh Hede Hospira‐Orchid and the USD 12 million Perrigo ‐ Vedant deals being the key ones.
Yogesh.hede@avendus.com The value of outbound M&A deals was up from USD 625 million in FY09 to ~ USD
800 million in FY10. The largest outbound deal, Fortis’s USD 685 million
Sushrath Kaul acquisition of TPG’s stake in Parkway Holdings accounted for > 85% of the value of
Sushrath.kaul@avendus.com outbound M&A. The 2nd largest outbound deal was the USD 75 million acquisition
of Aspen’s penems and penicillin injectables’ facility in Brazil by Strides Arcolabs.
Koushik Bhattacharyya
Koushik.b@avendus.com The value of domestic M&A deals remained at ~ USD 200 million in FY10 – around
the same level as in FY09. The largest domestic deals were the USD 180 million‐
Kaustubh Chandrabhan acquisition of 10 of Wockhardt Hospital’s key facilities by Fortis. The 2nd largest
Kaustubh.chandrabhan@avedus.com domestic deal was the USD 21 million‐acquisition of the Indian rights of i‐Pill,
Cipla’s emergency contraceptive brand by Piramal Healthcare.
Private Equity bounced back from its FY09 lows with the total value of PE deals in
FY10 more than doubling to USD 386 million invested through 16 deals.
Disclaimer: The news articles contained herein are Healthcare‐deals ruled the roost as usual with USD 318 million having been
only a part of the original articles from the source invested through 13 deals. The largest healthcare deals included the USD 115
mentioned and therefore are not complete. In case million‐investment by Goldman Sachs into Max, a USD 55 million investment by
you need complete articles, please contact us on the New York‐based GTI Ventures into Nova Medical Centers, a USD 15 million equity
e‐mail addresses provided above. investment by IFC into Apollo Hospitals for the latter’s “Apollo Reach” project, a
The news contained herein has been taken from
USD 30 million investment by IFC (again) into Max. IFC was invested in both Apollo
published sources as indicated under each item.
Avendus will not be held liable for any erroneous
and Max prior to the above‐mentioned deals.
data as published in the source indicated. Avendus The only reported big‐ticket private equity deal in pharma was the investment of
also does not take any responsibility for any errors or USD 56 million into Nectar Lifesciences by New Silk Route.
omissions or results of any actions based upon this
information. Globally, the value of pharma/ healthcare deals went down by > 40% to USD 178
bn – the apparent decline also influenced by the Pfizer‐Wyeth, Roche‐ Genentech
and Merck‐SP deals that happened in FY09. As usual, the underlying themes for
global consolidation in FY10 were scale‐ups (e.g., Teva ‐ Ratiopharm), access to
niche therapeutic segments (e.g., GSK‐Stiefel, Novartis‐Alcon) and new
geographies (Abbott‐ Solvay, and Dainippon‐ Sepracor).
Team Avendus
Domestic Deal Round‐up FY10
Mergers & Acquisitions
It was a mixed year for M&A in the Indian life sciences space, with the total deal value having gone up by ~70% to USD 2.17
bn vis‐à‐vis USD 1.26 bn a year ago (considering an ex‐Ranbaxy FY09). However, excluding the USD 625 mn Shantha‐ Sanofi
deal (which was essentially struck between Paris based Merieux alliance and Sanofi‐Aventis), FY10 saw a modest 22%
increase in the total value of the deal to USD 1.54 bn. The number of deals, at 15, was significantly lesser than the past
years and there was a threefold rise in the average deal size from USD 35 mn in FY09 to USD 102 mn in FY10. This was
driven by a larger number of relatively big‐ticket inbound deals and the conspicuous absence of the smaller domestic and
outbound deals, which have so much been a characteristic of M&A in the Indian lifesciences.
A major part of the total deal value was constituted by three large deals – Fortis‐ Parkway (USD 685 mn) , Hospira‐Orchid
(USD 400 mn) and Fortis‐ Wockhardt (USD 182 mn). The first quarter was a bit slow with only USD 141mn of deals. The
deals were evenly spread out across the other three quarters with each quarter seeing one large deal (> USD 150 mn).
The total value of inbound deals excluding the Shantha deal amounts to USD 0.52 billion, up from USD 0.41 billion in FY09.
The dominant theme in inbound deals was the acquisition of Indian development/ manufacturing capabilities by global
generics players, with the USD 400 million Hospira‐Orchid and the USD 12 million Perrigo ‐ Vedant deals being the key
ones.
Indo‐Europe cross border M&A stayed low at USD 35 mn and the only significant deal was the acquisition of Wockhardt’s
animal healthcare business by Vetoquinol, a French animal healthcare company. Outbound acquisitions in Europe have
thinned out in recent times as Indian players are still wary about the structural shift taking place in several European
markets away from branded generics to pure generics. Previous European acquisitions by Indian players – Betapharm
(DRL), Terapia (Ranbaxy), Pinewood & Negma (Wockhardt) have seen limited success and the Indian companies might want
to go slow till the clarity on the regulatory picture emerges post the expected changes.
The value of outbound M&A deals was up from USD 625 million in FY09 to ~ USD 800 million in FY10. The largest outbound
deal, Fortis’s USD 685 million acquisition of TPG’s stake in Parkway Holdings accounted for > 85% of the value of outbound
M&A. The 2nd largest outbound deal was the USD 75 million acquisition of Aspen’s penems and penicillin injectables’ facility
in Brazil by Strides Arcolabs. There were only two other outbound acquisitions, including Lupin’s acquisition of fenofibrate
brand Anatara for USD 39 mn, and the average outbound M&A deal size increased considerably from USD 26 mn in FY09 to
USD 200 mn in FY10.
The value of domestic M&A deals remained at ~ USD 200 million in FY10 – around the same level as in FY09. The largest
domestic deals were the USD 180 million‐acquisition of 10 of Wockhardt Hospital’s key facilities by Fortis. The 2nd largest
domestic deal was the USD 21 million‐acquisition of the Indian rights of i‐Pill, Cipla’s emergency contraceptive brand by
Piramal Healthcare.
A trend that has been replacing outright acquisitions in the life sciences space is that of the Big Pharma tying up with Indian
players to market certain products in other geographies. The trend started last year with the Pfizer‐ Aurobindo deal and
FY10 saw a plethora of such alliances as well, including Pfizer‐ Claris, GSK‐ DRL and Astra Zeneca‐ Torrent deals. Such deals
are a win‐win situation for smaller Indian companies whose capacity to market their products in regulated markets is
2
limited and for Big Pharma who get cheap but quality manufacturing bases. These symbiotic alliances are becoming an
order of the day and we see more such deals coming through in the next year.
CLASSIFICATION OF M&A DEALS (BY VALUE) CLASSIFICATION OF INBOUND DEALS (BY VALUE)
2,000 800
1,826
700
1,536
198
1,500 1,371 600
1,258 215
USD Mn
756 500
USD Mn
375 222
1,000 522 400
168 411
756
300
500 522
871 828 799 200
625 278
100 168
‐
‐
FY07 FY08 FY09 FY10
FY07 FY08 FY09 FY10
M&A Outbound M&A Inbound M&A Domestic Pharma Healthcare
CLASSIFICATION OF OUTBOUND DEALS (BY VALUE) CLASSIFICATION OF TOTAL DEALS (BY VOLUME)
1,000 50
871 828 799 39 40
800 62 40
2 6
34
625
# of Deals
30 8
600 48
USD Mn
Note: Sanofi‐Shantha deal of USD 625 million is not considered in the analyses
MAJOR M&A DEALS IN FY10
Deal Size
Acquirer Acquire's country Target Target's country
(USD Mn)
Fortis Healthcare India Parkway Holdings (Seller: TPG Capital) Singapore 685
3
Private equity
With the economic environment improving greatly in FY10, private equity transactions received a shot in the arm, with the
total deal value almost doubling up to USD 386 mn compared to USD 196 mn in FY09. The number of deals, however, came
down from 23 to 16 in FY10, driven by a fewer number of small USD 1‐5 mn deals (2 in FY10 as against 10 in FY09).
Healthcare delivery, primarily hospitals, has again emerged as the sector in flavor, with 13 out of the 16 deals happening in
this space with USD 318 mn being raised. In FY08 also, the high number and value of deals was driven by hospital deals,
with 13 deals amounting to ~$ 500 mn.
The largest healthcare deals included the USD 115 million‐investment by Goldman Sachs into Max, a USD 55 million
investment by New York‐based GTI Ventures into Nova Medical Centers, a USD 15 million equity investment by IFC into
Apollo Hospitals for the latter’s “Apollo Reach” project, a USD 30 million investment by IFC (again) into Max. IFC was
invested in both Apollo and Max prior to the above‐mentioned deals.
The only reported big‐ticket private equity deal in pharma was the investment of USD 56 million into Nectar Lifesciences by
New Silk Route
MAJOR PE INVESTMENTS IN FY10
Deal Size
Year Company Investor
(USD Mn)
Dec‐09 Max India Goldman Sachs 115
Jan‐10 Nectar Lifesciences NSR 56
May‐09 Nova Medical Centres India GTI Group 55
May‐09 Max India IFC 30
Mar‐10 Diwan Chand Medical Asian Healthcare Fund 20
Feb‐10 MEDall Peepul Capital 20
Apr‐09 Vasan Eye Care Group Sequoia Capital India 20
Jun‐09 Apollo Hospitals IFC 15*
Nov‐09 KIMS Hospital Milestone/ Religare 13
Feb‐10 HCG (Oncology Chain based in B'lore) Milestone/ Religare 10
*Note: IFC invested another USD 35 mn as mezzanine in Apollo
PE DEALS (BY VOLUME & VALUE)
PE DEALS (BY SECTOR)
35 800
800 40
700 32 700
600
600
30
500 16 500 521
USD Mn
400
400
731 20 195
300 24 300
456
200 319
200
421 10 261 74
100 100 210
196 122
0 67
‐ ‐
FY07 FY08 FY09 FY10 FY07 FY08 FY09 FY10
PE (USD Mn) PE (#) Pharma Healthcare
4
With the current high valuations being offered to most of the listed companies in the lifesciences space, capital market
products like IPO, QIP, Rights issuances, etc are competing fiercely with private equity as a means of raising money. This
could be a dampener for private equity as most promoters of established businesses with proven record of revenue
generation might want to raise money from the public markets to optimize valuation and associated investor rights. In this
regard, we believe that private equity players would need to get aggressive on valuations to strike deals in high‐quality,
established businesses or develop comfort in investing into differentiated and promising models, but yet‐to‐be‐proven
businesses. The Nova deal this year was an example where a large amount of private equity was invested into a Greenfield
healthcare venture.
Global Deal Round up FY10
After a historic FY09 for M&A in life sciences, the last three months of which saw deals worth USD 150 bn, FY10 saw a
drop, both in the total number of deals in the sector as well as the total deal value. Most of the companies which made
big ticket acquisitions (Pfizer, Merck, Roche, Takeda, Teva, Eli Lilly to name a few) in FY09 spent this year lying low and
consolidating their acquisitions. As expected, most of the top 20 transactions of FY10 were characterized by the effort
to scale up (Teva‐ Ratiopharm), diversify into newer product offerings (Novartis‐ Alcon, GSK‐ Stiefel) or foraying into
newer geographies (Abbott‐ Solvay, Dainippon‐ Sepracor).
DEALS > 1BN USD OVERALL DEALS
300
49 30 60 350 1,339 989 1,600
1,160
250 44 50 300
250 1,200
200 40 898
30 200
150 30 800
257 150 285 308
268
100 201
174 20 100
118
178 400
50 10 50
‐
‐ ‐ ‐
FY07 FY08 FY09 FY10 FY07 FY08 FY09 FY10
Total value of deals>1bn Total value of deals
No of deals>1bn No of deals
The apparent reduction in the total deal value in FY10 was largely a result of lesser number of multibillion dollar deals in the
year. The Pfizer –Wyeth (USD 65 bn), Merck‐ Schering Plough (USD 43 bn) & Roche Genentech (USD 44 bn), together added
a whopping USD 152 bn in the last three months of FY09. Understandably, the top five deals by value for FY10 constituted
USD 54 bn (including Merial restructuring) as compared to an astonishing USD 180 bn in FY09.
In the next section we have summarized the top 10 deals for FY10 with the details on the terms of the deal and what the
rationale behind them was.
5
Top 10 deals of the year gone by
(1) Alcon‐Novartis, USD 28 bn, January 2010
Novartis AG, which already held ~ 25% in Alcon Inc exercised its option to purchase a further 52% for a whopping sum of
~USD 28 Bn from Nestle SA. Alcon is a listed Swiss company engaged in manufacturing & distribution of eye care products
Novartis will now hold a 77% stake in Alcon and intends to acquire the remaining 23% in Alcon. Once Alcon is wholly owned
by Novartis, it will become the new Novartis eye care division.
Alcon bought the shares at an exercise price of USD 180 per Alcon share in cash, a 9.5% premium over Alcon's closing share
price of USD 164.35 as on 31 December 2009, the last trading day prior to the announcement.
Eye care is one of the fastest growing segments in healthcare, with a 5 year CAGR >10%. Post the deal, Novartis‐ Alcon
would have CY08 proforma sales of USD 8.5 bn. It would provide Novartis with global leadership in ophthalmic surgical
products, complementary pharmaceutical portfolios for diseases in front and back areas of the eye and strong global
brands in lens care.
(2) Merck KGaA – Millipore, USD 7.2 bn, February 2010
Merck KGaA signed a definitive agreement to acquire Millipore Corporation, a Massachusetts based life science company,
providing tools and services for biopharmaceutical research and manufacturing in the Americas, Europe, and the Asia
Pacific.
Merck KGaA shall pay USD 107 per Millipore share, which provides a premium of 50.0% based on Millipore's closing share
price of USD 71.34 on 19‐Feb‐10, which is one business day prior to Millipore being identified by various financial reports as
a takeover target.
Historically Merck management has stated that they would like to bolster its Chemicals/Life Sciences division to provide a
substitute for declining LCD revenue in the future. The company also seeks a balance of Pharma and Chemicals assets.
Currently, the Chemicals business sector generates around 25% of Merck's total revenues. Following the transaction, the
Chemicals business will contribute 35% of total group revenues of EUR 8.9 bn (pro forma).
(3) Abbott – Solvay, USD 6.6 bn, September, 2009
Abbott Laboratories acquired Solvay Pharmaceuticals SA, from Solvay SA, the Belgian chemicals and pharmaceuticals
Company, for a cash consideration of EUR 4.5 bn. Further payments of up to EUR 300m depending on sales targets between
2011 and 2013, and an assumption of certain liabilities valued at approximately EUR 360 mn will be made.
The acquisition is in line with Abbott's strategy to diversify their pharmaceutical portfolio and expand their presence in key
high‐growth emerging markets. Solvay brings a portfolio of drugs in cardiology, neuroscience, hormone therapy, and
gastroenterology. Additionally, Abbott gains control of their jointly‐owned Tricor (fenofibrate) and TriLipix (fenofibric acid)
franchise. About 75% of Solvay's Pharma revenue stems from outside of US (vs. Abbott's 49% of pharma sales). The deal
strengthens Abbott's non‐US presence (particularly in the emerging markets) with well‐recognized brands. On the R&D side,
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Solvay’s late‐stage pipeline includes Duodopa for Parkinson's and Gabapentin for post‐therapeutic neuralgia. Abbott is
believed to be committed to the R&D efforts of Solvay, any upside arising from that shall be an additional benefit.
(4) TPG/CPP – IMS, USD 5.3 bn, November, 2009
IMS Health Inc (RX) was acquired by a consortium comprising the PE fund TPG and the pension fund CPP.
IMS Health is a global leader in providing business intelligence, including information, analytics, and consulting services to the
pharmaceutical and healthcare industries worldwide.
The consortium shall be paying USD 22.00 per RX share, which provides a premium of 31% based on RX's closing share price
on 04‐Nov‐09 of USD 16.81. The implied equity value of the transaction is approx. USD 4.01 bn.
(5) Teva – Ratiopharm, USD 4.9 bn, March 2010
Teva Pharmaceutical Industries Ltd has acquired Ratiopharm GmbH, the Germany based unlisted company headquareterd in
Ulm, and specializing in pharmaceutical generics. The acquisition was made at an enterprise value of EUR 3.625 bn.
The transaction is in line with Teva long‐term strategy to further develop in the European market which is an growth driver.
The acquisition will position Teva as the leading generic pharmaceutical company in Europe. It will provide Teva with strong
presence in key European markets, most notably in Germany, as well as rapidly growing generic markets such as Spain, Italy
and France. Teva will increase its European business from sales of USD 3.3 bn in 2009 to joint pro forma sales of USD 5.2 bn.
Teva expects synergies of USD 400 mn, which should be fully realized within three years.
This is the second multibillion dollar acquisition in a space of one year where a strong US based player has looked at
strengthening its European presence through an acquisitive route. Earlier this year, Watson had acquired Arrow, a UK based
generic company for USD 1.75 bn to make inroads into the European markets.
(6) GSK – Stiefel, USD 3.3 bn, April 2009
GSK acquired Stiefel Laboratories, a US based company, specializing in dermatology. GSK’s existing prescription
dermatological products are now combined with Stiefel Laboratories and the new business operates under the Stiefel
Laboratories name within the GSK Group.
The total consideration comprised USD 2.9 bn in cash, of which GSK would be paying USD 0.3 bn in potential earn‐out cash
payments based on the future performance of Stiefel Laboratories. In addition, GSK assumed USD 0.4bn of Stiefel
Laboratories' net debt upon closing.
The transaction is in line with GSK’s strategy to grow and diversify its dermatology business, while leveraging its existing
global commercial infrastructure and manufacturing capability and taking advantage of synergy opportunities. GSK will
benefit from Stiefel Laboratories' specialty sales force experience, relationships and management in the dermatology field.
The combination will create a new specialist dermatology business with expected revenues of approximately USD 1.5 bn in
the industry, a new product offering with more than 15 projects in late‐stage development across a variety of dermatological
conditions, and access to proprietary formulation technologies. In addition, Stiefel Laboratories will be able to expand its
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customer base, while benefiting from GSK’s global distribution capabilities in markets such as Brazil, Russia, India, China and
Japan, and commercial organizations.
(7) Warner Chilcott – P&G Pharma, USD 3.1 bn, August 2009
In August last year, Warner Chilcott acquired P&G Pharma for a consideration of ~ USD 3.1 bn.
The acquisition includes P&G's range of pharmaceutical products including Asacol HD (mesalamine) delayed‐release tablets
for ulcerative colitis, Actonel (risedronate sodium) for osteoporosis, the co‐promotion rights to Enablex(R) (darifenacin) for
the treatment of an overactive bladder, along with P&G's prescription drug product pipeline and manufacturing facilities in
Puerto Rico and Germany.
The acquisition will allow Warner Chilcott to strengthen its position in the specialty pharmaceuticals industry by expanding in
the women's healthcare market and provide Warner Chilcott with growth opportunities in the urology market. The
acquisition of P&G's pharmaceutical development capabilities, clinical pipeline and its gastroenterology therapies will
strengthen Warner Chilcott's product portfolio. The divestment is in line with P&G's strategy to focus on the consumer health
care, personal health care, oral care, and feminine care sectors.
(8) Dainippon Sumitomo – Sepracor, USD 2.2 bn, September 2009
Sepracor, a US based Pharma company, focusing on differentiated products are prescribed principally by primary care
physicians and certain specialists, was acquired by Dainippon Sumitomo Pharma (DSP), a Japanese company, by way of a
tender offer.
Sepracor now operates as a wholly owned subsidiary of Dainippon Sumitomo Pharma America Holdings, the US subsidiary of
DSP, and continue its operations in Marlborough, Massachusetts and Canada. Sepracor has held onto its name, branding and
intellectual property rights.
DSP tender offer was at USD 23.00 per Sepracor share, which represented a premium of 27.6% based on the closing share
price of Sepracor on 1‐Sep‐09 of USD 18.03. The implied equity value of the transaction is USD 2.55bn.
The acquisition was primarily driven by the objective to obtain the distribution channel for Lurasidone (DSP’s drug for
schizophrenia in phase III) in the US. The company targets to file in early 2010 with expectation of the launch in 2011. Since
Dainippon Sumitomo has no sales infrastructure in the US, the company has been pursuing multiple options, including an
acquisition of a firm and co‐promotion with a company that has an established franchise. Sepracor has roughly 1,200 reps to
market six products in respiratory and central nervous system disorders in the US.
(9) Sanofi – Chattem, USD 2.1 bn, December 2009
Sanofi Aventis signed a definitive agreement to acquire Chattem, Inc. a Tennessee based listed company, engaged in
manufacturing and marketing branded consumer healthcare products, toiletries and dietary supplements in the US, for an
amount of USD 2.1 bn.
Sanofi shall be paying USD 93.50 per Chattem share, at a premium of 33.6% based on Chattem's closing share price on 18‐
Dec‐09 of USD 69.98. The implied equity value of the transaction is approx. USD 1.78 bn. Post the deal, Mr Zan Guerry,
8
Chairman and CEO of Chattem , and the senior leadership team of Chattem shall lead Sanofi‐Aventis' U.S. consumer health
division.
The deal will create the world's fifth‐largest consumer healthcare company measured by revenues. The deal makes strategic
sense as Sanofi seeks to switch Allegra from Rx to OTC, and Chattem would provide an ideal route to market given its
extensive OTC infrastructure, among the largest outside of the OTC divisions of other big Pharma companies. Additionally,
significant revenue synergies should be obtained through the expansion of Chattem's products into geographic markets
where Sanofi has a strong operating presence, particularly in emerging markets.
(10) Bristol Myers Squibb – Medarex, USD 2.1 bn, July 2009
BMS acquired the Princeton based Medarex, a biopharmaceutical company engaged in the development, manufacturing, and
marketing of pharmaceutical and nutritional products by way of a tender offer.
BMS acquired the shares at USD 16.00 per share. The offer provides a premium of 93.2% based on closing share price on 22‐
Jul‐09 of USD 8.40. The implied equity value of the transaction is approx. USD 2.40bn (with ~300 mn on Medarex’s books,
which lowers the effective acquisition price to ~ USd 2.1 bn).
The transaction essentially involves the acquisition of 3 assets (1) Ipilimumab, currently in Ph III studies in first‐line melanoma
and advanced prostate cancer (2) Royalty stream (current and future), which offers earnings stream from products such as
JNJ’s golimumab and ustekinumab, NVS’ Ilaris, and GSK’s ofatumumab, and (3) R&D platform which includes UltiMAb human
antibody development system and antibody‐drug conjugate (ADC) technology. Medarex also has multiple earlier stage
compounds.
The acquisition clearly complements BMY’s strategy to become a biopharma company focused on specialty disease areas and
reinforces BMS’s endeavor to compensate for its patent cliff by spinning/divesting non‐core assets and buying up biologic
technology and earlier‐stage assets
9
Valuation Snapshot
(As on 31st Mar‐10)
1 yr
Company Market Cap
Enterprise Value Stock EV/ Revenue EV/ EBITDA P/E
Return
CRAMS
Piramal Healthcare 8,858 10,102 118% 2.8 14.6 18.7
Divi's Lab 8,974 9,012 45% 9.5 25.3 29.0
Dishman 1,714 2,393 110% 2.5 8.3 9.9
Jubilant Organosys 4,986 8,483 254% 2.3 13.4 14.0
Suven Lifesciences 372 424 191% 3.3 34.4 55.5
CRAMS Mean 4.1 19.2 25.5
CRAMS Median 3.0 16.9 22.1
Generics
Sun 37,066 35,576 61% 8.6 24.0 27.2
Cipla 27,066 27,953 53% 18.8 18.5 25.5
Glenmark 7,183 9,206 69% 4.1 21.3 32.0
Lupin 14,449 15,594 136% 3.5 17.3 22.9
Generics Mean 8.7 20.3 26.9
Generics Median 6.3 19.9 26.4
India Branded Formulations
Pfizer 2,867 2,324 66% 2.9 10.4 19.5
Glaxo 15,058 13,330 63% 7.1 19.0 29.8
Indoco 491 517 190% 1.7 8.3 13.7
FDC 1,507 1,500 131% 2.3 8.7 12.3
Wyeth 1,830 1,627 93% 4.1 12.2 20.5
Novartis 1,832 1,779 58% 2.9 10.2 16.8
IBF Mean 3.5 11.5 18.8
IBF Median 2.9 10.3 18.1
Hospitals
Apollo Hospitals 4,509 5,092 83% 2.9 16.7 29.7
Fortis 5,814 6,235 163% 8.1 44.5 114.7
Kovai Medical 139 187 107% 0.4 2.7 4.7
Indraprastha medical 416 462 62% 3.7 18.3 37.1
Hospitals Mean 3.8 20.6 46.5
Hospitals Median 3.3 17.5 33.4
Mean 4.8 17.3 28.1
Median 3.3 16.7 22.9
10
News Line
Wockhardt ends Abbott deal on lender pressure
(Economic Times)
Wockhardt’s deal to sell its nutrition business to US firm Abbott was ended jointly by both companies, as the troubled
Indian drug maker buckled under foreign lenders pressure to stop the sale. Wockhardt was unable to resolve debt
restructuring issues with some of its lenders. But analysts tracking Wockhardt said the company may be negotiating a
better deal. Wockhardt officials refused to comment. Wockhardt had agreed to sell the nutrition business to Abbott for
about Rs 600 crore in July 2009.
In October, Wockhardt defaulted on payments of its overseas convertible bonds that had matured. Bondholders and other
unsecured lenders approached the Bombay High Court to prevent Wockhardt’s assets sale, as 10% would be retained by
the promoters as non‐compete fee and the rest would go to secured lenders. They argued the entire amount was due to all
lenders. A year ago, foreign majors like Pfizer and Danone were reportedly interested in the nutrition division, but it is
unclear whether they would pursue the possibility. More recently, there have been rumours that French firm Sanofi‐
Aventis may strike a deal with Wockhardt. But whoever steps in will have to grapple with the same legal issues.
Interestingly, the market cheered the deal’s termination. Wockhardts stock ended 3.3% higher on the day the termination
was announced.
The company’s nutrition business is growing at nearly 15‐16% annually on sales of around Rs 200 crore last year.
Wockhardts 2009 revenue stood at Rs 3,629 crore, up 1% from the previous year. The court never approved the sale to
Abbott, as these creditors opposed the arrangement for Wockhardt to receive a hefty non‐compete fee. The local banks led
by ICICI and State Bank of India (SBI), however, are backing Wockhardt’s debt rejig programme that includes assets sale.
Piramal acquires Cipla’s i‐pill brand in India for Rs.95 crore
(Hindu)
Piramal Healthcare has entered into an agreement for acquiring Cipla’s contraceptive pill brand, i‐pill, in India for Rs 95
crore. ‘I‐pill’ is an emergency contraceptive pill (ECP) and is available over the counter at local chemists. The company has
signed a definitive agreement for purchase of all intellectual property rights in India related to ‘i‐pill’ brand of Cipla.
The acquisition of ‘i‐pill’ strengthens Piramal’s over the counter (OTC) portfolio, which has strong consumer brands such as
Lacto Calamine skin care range, Supractiv Complete, Saridon and Polycrol antacid.“Our decision to divest the brand is
driven by our current domestic product portfolio focused on prescription drugs. We are pleased that Piramal Healthcare,
with a strong OTC portfolio has bought the brand and are confident that they will successfully accelerate the future growth
of this brand,” Cipla Joint MD Amar Lulla said.
11
Strides to buy out Aspen in ventures
(DNA Money)
Strides Arcolab, the Bangalore‐based drug firm, will buy its South African partner Aspen Pharmacare's stake in their two
oncology joint ventures for USD117 mn. The two companies had formed 50:50 joint ventures — Onco Laboratories and
Onco Therapies — in 2007. According to Arun Kumar, vice‐chairman and group CEO, Strides, the restructuring will help the
company in its greater focus on the specialties division.
T S Rangan, group CFO, said between 2007 and now Strides entered into licensing agreements with biggies like GSK and
Pfizer to supply generics, and having a core focus on specialty business will further help the deals with the Big Pharma.
In 2008, Strides entered an agreement with GSK to supply products to 80 countries, and in January 2010, signed an
agreement with Pfizer to supply 40 generics in the US.
The Rs 1,300 crore Strides, which is targeting turnover of Rs 1,775‐1,800 crore by December 2010, currently has 40
oncology products.
Fortis Healthcare to buy 23.9% stake in Singapore's Parkway for $685 mn
(Economic Times)
Fortis Healthcare announced that it is buying private equity firm TPG Capital’s 23.9% stake in Singapore’s Parkway Holdings
for $685.3 million, supplanting Apollo Hospitals as Asia’s largest hospital chain.
Chairman Malvinder Singh, a former owner along with brother Shivinder of pharmaceutical company Ranbaxy Laboratories,
said the deal will place Fortis strategically for leadership in Asia and is a big step towards realising its vision of becoming a
global healthcare delivery network. The addition of Parkway’s 16 hospitals and over 3,600 beds in Singapore, Malaysia,
Brunei, India, China and the UAE will expand Fortis’ network to 62 hospitals and 10,000 beds. Chennai‐based Apollo
Hospitals runs 46 hospitals with over 8,000 beds. It also has an equal joint venture with Parkway in a 425‐bed hospital in
Kolkata ‐ Apollo Gleneagles. The deal values Parkway at a 14% premium to the S$3.12 closing price of its share on the day
of announcement. Fortis plans to have four seats on the board of Parkway. It will also nominate Malvinder Singh as the
chairman of the Singapore company. The Fortis stock rose to Rs 181.15, its highest level in a year, before closing 4.85%
higher at Rs 178.45 on the Bombay Stock Exchange on the day of announcement.
Aptuit not selling stake in Laurus
(Novis Pharmaceutical News)
US CDMO Aptuit says its stake in Indian JV Aptuit Laurus unit is not for sale, scotching speculation that Swiss life‐sciences
supplier Lonza was interested in making a bid.
In a statement last week, the contract development and manufacturing organisation (CDMO) said that the story, reported
in India's Business Standard, is based on rumors and there are no current discussions about a sale of these assets.
"We wish to reiterate our long‐term commitment to the relationship with Aptuit Laurus that we established several years
ago, as well as our overall commitment to the Indian market."
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Aptuit owns 51 per cent of Aptuit Laurus, while joint venture partner Laurus Labs owning the remainder of the firm. The
unit has a turnover of around 2.50bn rupees ($55m).
Ranbaxy partners Pfenex for biosimilar product
(Business Line)
Ranbaxy Laboratories will develop an undisclosed biosimilar therapeutic protein product based on a technology platform by
Pfenex Inc. Under the terms of the agreement, Pfenex is eligible to receive maintenance fees as well as milestone and
royalty payments on product sales derived from the agreement. Ranbaxy and Pfenex scientists will collaborate on
developing the production strains and the process that will be used in support of clinical development and commercial
production of the biosimilar product. “Within our overall bio‐therapeutic plan, the Pfenex technology will enable Ranbaxy
to develop a high quality, cost effective product,” said Mr Atul Sobti, CEO and Managing Director of Ranbaxy.
Mr Bertrand C. Liang, CEO of Pfenex said, “This collaboration is a great combination of the strength of Pfenex Expression
Technology being leveraged for the cost‐effective production of biosimilars, and launch products globally.”
Pfenex Inc's technology is used for the production of research proteins, reagent proteins, biosimilars and innovator
biopharmaceuticals.
Indoco Remedies inks drug supply pact with Aspen
(Business Standard)
Indoco Remedies has entered into a long‐term drug supply pact with Aspen Pharmacare, the largest pharmaceutical
manufacturer in Africa and one of the top 20 generics manufacturers in the world.
“This arrangement will provide a steady stream of revenues, even during the process of product registration in the form of
milestone payments, and the sale proceeds are expected to commence from the first quarter of 2011,” said Suresh G Kare,
chairman and managing director.
The deal encompasses a number of ophthalmic products and will extend to 30 countries in emerging markets. Indoco will
offer these products for registration and supply the same from its global standard manufacturing facilities in India.
“This arrangement will provide a steady stream of revenues, even during the process of product registration in the form of
milestone payments, and the sale proceeds are expected to commence from the first quarter of 2011,” said Suresh G Kare,
chairman and managing director.
Both companies did not disclose the size of the deal. A few months ago, Indoco had signed an alliance with the US‐based
Watson Pharmaceuticals to develop and manufacture a number of generic drugs with a current market size of $670 million
for the US market. Bangalore‐based Strides Arcolab had recently bought the stake owned by Aspen Pharmacare in two
50:50 cancer drug making joint ventures — Onco Therapies in India and Onco Laboratories in Cyprus — besides one plant in
Brazil. Earlier, companies such as Lupin had alliances with Aspen Pharmacare.
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US healthcare bill: Gains for Indian pharma
(Business Standard)
The healthcare reform Bill proposed by US President Barack Obama is now a law as the Patient Protection and Affordable
Care Act. With the US market accounting for about half the global pharma sales, this may completely change the industry.
Big Pharma (top global innovator companies) will have to pay fresh taxes, but will gain a huge new market. Generic
manufacturers, though losing out on the patent exclusivity battle for branded drugs, will gain from the reforms in the
insurance market and easier regulatory procedures for bio‐similars, according to analysts.
The Act has served 32 million new consumers in the world’s most lucrative market by extending insurance coverage to a
larger pool, covering 95 per cent of the American population. Direct new business for the industry from the newly‐insured
is estimated at $115 billion over the next 10 years. That apart, “Co‐pay reforms, elimination of lifetime caps, and enhanced
coverage of preventative services can easily generate an even bigger boost in prescription utilisation than will come from
the newly insured,” says a pharma industry report by RPM.
For Indian generic manufacturers, benefits will stem from the omission of any ban on pay‐for‐delay settlements between
innovators and generic manufacturers.
With drugs valued at over $100 billion set to lose patent exclusivity in the next five to six years (according to an Ambit
report), generic manufacturers will continue to trawl the space for opportunities.
Opportunities will also stem from the clear support for generics as evinced in closing the ‘donut hole’ in Medicare Part‐D
(medical services plus prescription drug coverage plans) for senior citizens.
AstraZeneca to sell branded generics in deal with Torrent
(Novis Pharmaceutical News)
AstraZeneca targets global generics market in license and supply deal with Indian manufacturer Torrent Pharma. The UK
major has purchased the right to sell 18 of Torrent's portfolio of generic pharmaceuticals in nine key emerging markets
under its own branding. Torrent will continue to manufacture the products in question, and any others that are added to
the deal in future, at its facilities in Chhatral and Baddi.
The new agreement marks AstraZeneca's entry into the generics field and is in keeping with recent deals made by Big
Pharma peers in the face of impending patent loss for blockbuster products.
Ranbaxy de‐listing expected in 4 months
(Financial Express)
Japanese drug‐maker Daiichi Sankyo, which owns 64% stake in Ranbaxy Laboratories Ltd, has finally firmed up plans to de‐
list the firm from the stock exchanges. Though speculations about this had been rife since Malvinder Singh stepped down
as CEO last May, sources said Daiichi has now got down to finalising the modalities for de‐listing in the next four months.
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The company is working on the buyback price, which has to be attractive enough for shareholders to tender their shares.
Sources said Daiichi wants to de‐list in order to have full control over the company. The move is also seen as part of the
efforts to fully integrate Ranbaxy, India's largest drug‐maker by sales, with the Japanese parent. However, when contacted,
a Ranbaxy spokesperson denied any such plans. "There are no plans to de‐list the firm," said the company spokesperson in
response to an email query by FE. In January, speculations around de‐listing had seen Ranbaxy's share price rising almost
26% in two months to around Rs 516. Again, earlier this month, the markets were abuzz with speculation that a de‐listing is
imminent, prodding traders to stock up on the company's shares.
Overburdened FDA can affect prospects for Indian pharma cos
(DNA Money)
Getting approval of the US Food and Drug Administration to launch a generic version of an innovator drug used to take
about 6 months till some time back. It now takes up to 21 months, said the Generic Pharmaceutical Association (GPhA), a
US body.
Naturally, there is a pile‐up of applications which threatens to hamper the prospects of domestic pharma companies who
hope to benefit from a massive opportunity coming up in the world's largest pharma market. Drugs with sales of $157
billion are going off patent in the next couple of years in the US.
The Office of Generic Drugs (OGD), a unit of the FDA has close to 1,400 applications for new drugs (called ANDA, acronym
for abbreviated new drug applications) pending approval. In 2009, Indian firms won 138 of the 483 generics approved by
the FDA.
A Sun Pharma spokesperson said the ANDA backlog can potentially delay generic competition in both set of products—
products already genericised, as well as those going off‐patent.
"The backlog is quite substantial and can delay approvals for players, including us," the spokesperson said.
Margaret Hamburg, commissioner, FDA, said no one benefits from a pending‐application queue that will soon hit the 2,000
mark. "This is simply unacceptable. Uncertainty and delays are costly to consumers, costly to you—and hurtful to the
public. But the unprecedented spike in generics applications has simply outstripped our capacity to properly review, which
must remain our foremost focus," Hamburg said at a GPhA annual meeting on February 18.
Astrazeneca to sell Diabetes drug
(Hindustan Times)
AstraZeneca Pharma India has entered the Indian anti‐diabetes drug market by joining hands with Bristol‐Myers Squibb
India. Bristol‐Myers Squibb discovered both compounds and the companies already have a global alliance for the product.
With 5.1 crore people in India suffering from diabetes, the size of the anti‐diabetes market in the country is estimated to be
around Rs 2,000 crore.
Keeping an eye on this market, AstraZeneca and Bristol have jointly launched oral drug Onglyza (saxagliptin) in the Indian
market, which will compete with drugs from Novartis and Merck.
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Commenting about the alliance, Anandh Balasundaram, managing director of AstraZeneca Pharma India said, "Pulling
together knowledge, expertise and resources from both companies will create a powerful force to help doctors and
patients fight diabetes".
AstraZeneca is currently present in cardiovascular, respiratory, maternal healthcare, oncology, infection and pain control
and anesthesia segments. The drug would be marketed at a price of Rs 38 per dose of 5 mg strength.
Saxagliptin is being introduced in India at an affordable price. The drug will be launched at a fifth of its price in the US, to
help a wide section of Indian diabetic patients to access the drug. It is administered as a single daily 5 mg dose in adult
patient with type‐2 diabetes mellitus to improve sugar control," said Balasundaram.
GSK to lower prices to woo India market
(Economic Times)
GlaxoSmithKline would cut retail prices in India to cater to the lower‐income segment besides pumping in Rs 430 crore to
develop vaccines from its local facilities, according to Andrew Witty, global CEO of the world’s second largest drugmaker.
GSK was also evaluating potential acquisitions and alliances with Indian drugmakers, but will not pay unreasonably high
valuations expected by Indian companies. The London‐based firm had walked away from some potential buyouts due to
sharp valuation differences, he said. Stressing the growing share of low‐income consumers in GSKs India sales, he said the
company was working on plans to price its products accordingly. The long‐term purpose of the initiative is to make its
medicines accessible to all income groups. The strategy will be executed through a combination of alliances with local firms
or reduction of prices of selective brands.
GSK’s popular mass products in India are health drink Horlicks and painkiller Crocin. The company operates through two
listed arms in India, GSK Consumer Healthcare Ltd and GSK Pharmaceuticals Ltd. The pharmaceutical market is growing 15‐
20% in emerging markets such as India compared with a low single digit in developed countries. This had led to global
pharma majors Pfizer, GSK and Sanofi Aventis, which are set to lose patents of their blockbuster drugs, to buy or tie‐up with
Indian companies.
Reliance Life plans to launch biosimilar drug in Europe
(Economic Times)
The Mukesh Ambani‐owned Reliance Life Sciences plans to launch its biosimilar EPO in Europe within a year since it has
completed all required testing and now awaits final regulatory approval.
There is a regulatory pathway for Biosimilars in Europe, and Erythorpoietin (the red blood cell stimulant) will give us the
confidence to take others to market. In the recently‐passed US Health Bill the data exclusivity period for biological drugs
was extended to 12 years from seven earlier, which is seen as detrimental to development of biosimilars.
While Europe has a policy that approves of biosimilars, Indian companies have found it hard to crack the code. Dr Reddy’s
has been in talks with regulators to launch a biosimilar since 2006 and is still waiting. Biocon acquired a company in
Germany in 2008 to reach the market. Some global players like Novartis, Hospira and Teva have a head‐start because they
are marketing some products in developed markets.
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Mr Subramaniam said the company’s thrust in this year will be to expand its Indian business and enter new, semi‐regulated
markets. Unlisted Reliance Life Sciences that swung to profits in the just‐ended year, already has four biosimilar products in
India, and plans to launch another three in this year, said Mr Subramaniam. The company is also developing biosimilars for
five monoclonal anti‐bodies that are in pre‐clinical stages.. Reliance Life Sciences makes four generic pharmaceutical drugs
that are used to treat cancer.
GVK opens Ahmedabad clinical pharmacology unit
(Novis Pharmaceutical News)
Indian CRO GVK Biosciences hopes new clinical pharmacology unit in Ahmedabad will help boost patient recruitment to
meet growing demand for clinical trials in the region.
The 110 bed, three ward unit, which will focus on conducting early‐stage safety trials in health volunteers, boosts existing
local capacity and is in the ideal location according to contract research organization (CRO). Ahmedabad was the most
preferred and logical destination for expansion considering the volunteer pool accessibility and proximity to about 10 CROs
and leading Pharma companies.
GVK also said that, while a wide range of early‐phase clinical trials will be carried out, one focus of the unit will be to
increase the participation of women in research through the provision of dedicated special housing facilities for female
volunteers.
Company president Manni Kantipudi said: The opening of the new GVK BIO Clinical Pharmacology unit reflects our
commitment to offer faster recruitment solutions to our customers, and added that the first trial has already started.
Teva drags Famy Care to US court over patent infringement
(Financial Express)
Mumbai‐based oral and injectable contraceptive maker Famy Care was sued in a US court, along with partner Mylan Labs,
by the largest generic company Teva last week for alleged infringement of Teva's patent for oral contraceptive pills
Seasonique and LoSeasonique.
Along with Famy Care, another Indian firm, Lupin was also sued by Teva for alleged infringement of the contraceptive pills
two months back.
Famy Care is a major producer of intra uterine device like Copper‐T and oral birth control pills such as Mala‐D. The company
also makes various contraception products such as injectables, tubal rings and emergency contraceptives, catering to the
$7.5 billion global market for women reproductive health products. Ashutosh Taparia, MD, Famy Care did not respond to
the queries from FE.
In 2008, Mylan Labs, one of the largest global generic drug manufacturers, had formed a strategic alliance with Famy Care
to enter the US contraceptive market with jointly filing abbreviated new drug application (ANDA) for approval to launch at
least 22 new oral contraceptives with the US Food and Drug Administration (FDA).
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Two separate suits were filed against Famy Care in the US court of New Jersey by Teva Women's Health, Inc for alleged
infringement of its patent for LoSeasonique (oral contraceptives to prevent pregnancy and diminish premenstrual
symptomatology, and Seasonique. Both Seasonique and LoSeasonique are combination of ethinylestradiol (estrogen) and
levonorgestrel differing only in dose amount.
Teva said, "Mylan Pharma, the US agent for Famy Care, notified that Famy care had submitted an ANDA to the US FDA
seeking approval to manufacture, sell and distribute our Seasonique contraceptive product. By filing ANDA, intending to sell
the product before patent expiry, Famy Care infringes patent of both the drugs."
DRL gets nod to sell generic Allegra in US
(Business Standard)
Dr Reddy’s Laboratories would soon launch a generic version of Sanofi‐Aventis’ patent‐protected allergy drug Allegra in the
United States. The company is the only generic competitor which has challenged Sanofi’s patent on the extended release
version of Allegra. The allergy drug is to be administered once‐a‐day. There is an ongoing patent infringement case
between Sanofi and DRL in the US.
“We received the USFDA approval to launch generic Allegra on Wednesday and will launch the product in the US market
during the April‐June quarter,” a DRL spokesperson confirmed. Last year, the medicine had sales of $180 million in the US.
Analysts said the revenue upside from the drug would not be significant for DRL.
Ranbaxy, Takeda settle patent row
(Financial Express)
Ranbaxy Laboratories on Monday said it has settled a patent litigation with Japan's largest drug maker Takeda
Pharmaceuticals on the $3.4 billion blockbuster drug Actos (proglitazone hydrochloride‐15 mg, 30 mg and 45 mg tablets) in
the US market.
Through this, Ranbaxy managed a non‐exclusive royalty free licence for the generic version in August 2012. Takeda had
sued Ranbaxy along with Watson Pharmaceuticals Inc and Mylan Laboratories Inc in 2003 to block the launch of affordable
generic versions of Actos.
The arrangement with Ranbaxy is non‐exclusive as Takeda has already resolved its patent dispute with Watson on the same
drug last Wednesday and more settlements could be in the offing. The dispute started in 2003, when Takeda filed patent
infringement suits against Mylan Pharmaceuticals, Ranbaxy Laboratories and Watson, and later against Alphapharm in
March 2004. "This agreement will allow Ranbaxy to bring to patients with diabetes a generic alternative in this important
therapeutic area," said Jim Meehan, vice‐president of sales and distribution for RPI. The first patent for Actos expires in
January 2011. By settling the patent disputes with generic companies one after the other, Takeda is trying to delay the
launch of the affordable generic version of its third largest drug Actos until August 2012, around one and half years after
the expiry of the drug's main patent in January 2011.
Although it is clearly a positive development for Ranbaxy as it removes uncertainity on the launch date and reduces further
patent litigation costs, it is difficult to project the amount of monetary gains the deal may bring to the company, which
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hasn't revealed details and the exact nature of the deal. Actos is a once‐daily oral prescription medication that, with diet
and exercise, has been shown to be effective for the treatment of type 2 diabetes.
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