Indian Drugmakers Target Developed Market Joint Ventures

Amid accelerating domestic price pressures and the lure of high margins in Western markets, India's leading drug firms continue to seek new partnerships to build market share on the world's largest drug markets. Testimony to this is the announcement by the US unit of German generics firm Stada of a deal with medium-sized Indian firm Orchid Chemicals.

The agreement envisages the development and supply of six prescription generic cardiovascular, central nervous system, anti-allergic, gastrointestinal and anti-infective generics. Somewhat optimistically, Orchid estimates the potential size of the market for the new products at US$12.5bn, and the company is to begin shipping the drugs as soon as patents expire in 2007. The deal is also clearly positive for Stada, as the company struggles amid harsh government pricing policy in Germany, as well as increasing competition in the sector following Swiss drug major Novartis' acquisition of German generics producer Hexal AG. Reports have also speculated that Stada could itself become an acquisition target. Meanwhile, in a further development, Indian firm Zydus Cadila has also reached a new development agreement with the generics business of US-based Mallinckrodt Pharmaceuticals.

Indian firms' drive to expand operations in the US, Europe and developed Asian markets has been led by generics major Ranbaxy, which in common with many of its rivals has stepped up efforts to expand R&D activities, production and joint marketing ventures overseas. While Indian companies have benefited from the enthusiasm of many European governments for generics, tightening conditions at home have now urged a more sophisticated approach to lucrative foreign markets.