In a significant industry trend, Indian pharmaceutical companies are accelerating their US presence through strategic acquisitions. As reported in The Hindu BusinessLine, this movement represents a calculated response to evolving regulatory landscapes and market dynamics.
Market Pressures Driving Acquisition Strategy
Our CEO, Hari Kiran Chereddi, MD & CEO of HRV Global LifeSciences & New Horizon Global Pharma (NHG Pharma), highlights a critical factor behind this trend:
"Large Group Purchasing Organizations (GPOs) and Pharmacy Benefit Managers (PBMs) have squeezed the margins of suppliers. As a result, Indian pharma companies see mergers and acquisitions as a way to gain scale, optimize costs, and maintain profitability."
Supply Chain Security in Post-Pandemic Era
The pandemic exposed vulnerabilities that continue to influence strategic decisions. Hari Kiran Chereddi points out that
"Many Indian players are investing in Active Pharmaceutical Ingredient (API) production and backward integrating their supply chains. Acquiring Contract Development and Manufacturing Organizations (CDMOs) or Contract Manufacturing Organizations (CMOs) has become a key strategy."
Regulatory Considerations Remain
While US expansion offers substantial benefits, Hari Kiran Chereddi brings a pragmatic perspective to the challenges:
"Owning a manufacturing facility in the US does not entirely eliminate regulatory challenges, as even domestic plants must comply with stringent FDA regulations."
He further observes that
"US-based pharma assets often command premium valuations, making acquisitions expensive but strategically significant."
The Road Ahead
This acquisition trend parallels what we saw in the Indian IT sector 15-20 years ago- strategic geographical expansion to secure market positioning and long-term growth. While short-term challenges exist, the strategic value for companies with the right capabilities and integration approach remains compelling.
For the complete industry analysis, read the full article at: The Hindu BusinessLine
