Israel, India Crossover Sparks Acquisition Rumours

A series of recent media reports relating to generics giant Teva has led to speculation that Israeli generics makers could expand in India. The two countries' recent announcement of a joint R&D fund — as well as an expected academic collaboration agreement between IIT-Kharagpur and Technion-Israel Institute of Technology — have also fuelled the rumours.

It can be assumed that some of the interests of Israeli and Indian generics makers are starting to coincide, as generics firms in both countries attempt to boost their ethical drugs portfolio amid a more competitive international market. India's attractiveness as both an export market and R&D location has also increased in the wake of the country's recent moves to better protect patents and data exclusivity.

Nevertheless, mergers have historically been rare in India's pharmaceuticals sector, and Teva's own activities in India have been limited to sourcing small quantities of raw materials from the subcontinent. Nevertheless, as greater numbers of Indian firms penetrate the US market, and the country's operating environment remains attractively low-cost, the temptation among major drugmakers with a limited local presence to expand may become stronger. Further, India's gradual relaxation of rules on foreign ownership could also enhance the market's appeal.