The significance of India as a hub for low cost active pharmaceuticals ingredients (APIs) continues to make it attractive for inbound acquisitions.
In a latest move, Amneal Pharmaceutcials, the US-based generic drug maker, has acquired Raks Pharma Pvt Ltd, an APIs and drugs intermediate manufacturer, for $6 million, VCCircle has learnt.
Hyderabad-based Raks Pharma is a 50:50 Joint Venture between Amneal Pharma and Rakshit Drugs Pvt. Ltd., India. It supplies APIs and drug intermediates to the regulated markets of US, Europe and Japan besides others. Rakshit Drugs is another Hyderabad-based API maker. Raks produces ingredients in areas of anti-rheumatic, anti-migraine, anti-inflammatory and male erectile dysfunction.
When contacted, Rajesh Joshi, Director, Rakshit Drugs Pvt. Ltd., said, "Due to policy of our company & confidentiality of the matter we are unable to comment." An email sent to Amneal spokesperson did not elicit any response.
According to an earlier study by Chemical Pharmaceutical Generic Association (CPA), India is expected to make API sales of $4.8 billion by 2010, an average yearly growth rate of 19.3%. It has found the fastest growth rates for the merchant API market over the next five years are expected in Asia-Pacific, with an average yearly increase of 13.7% in global demand.
The low labour and environmental costs brings down the API production cost in India low. According to various studies, India contributes to 9% of overall global API production with sales of Rs 32,000-35,000 crore in 2009.
According to VCCEdge, since 1996, there were 132 deals worth $2.47 billion in the Indian healthcare & pharma space. However, the PE investors are keen on investing in the healthcare service firms rather than pure pharma players. In 2010, out of nine PE investments in Indian healthcare space, except three deals including investments in Famy care Ltd, Bharat Serums & Vaccines Ltd and Nectar Lifesciences Ltd, others were in hospitals and medical equipments.
In 2007, ISP Investco LLC acquired 11.48% stake or 2.2 million equity shares of Rs 105.50 each in Granules India Ltd., a pharmaceutical company engaged in the manufacture and sale of APIs, for a consideration of $5.67 million (INR 233.3 million).