Consolidation in the Generic Drugs Industry*



Case Code : CLBS049
Publication date : 2008
Subject : Business Strategy
Industry : Pharmaceutical
Length : 04 Pages
Price : Rs. 50

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Key words:

Generic drugs industry, pharmaceutical, consolidation phase, M&A, Mylan, Merck, Teva, Sandoz, global market for generic drugs, Barr, Watson, Actavis, Ranbaxy, Dr Reddy’s Laboratories Ltd (DRL), emerging market, Ivax, Hexel, Pliva, low-cost manufacturing, betapharm, patent law

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The global generic drugs industry was witnessing a trend towards acquisitions and consolidation. Between 2005 and 2007 there were a number of high profile M&A deals in this industry as the top companies such as Teva, Sandoz, Barr and Mylan consolidated. The top companies were also eyeing Indian pharmaceutical companies for M&A deals considering that the Indian pharmaceutical companies provided value that went beyond providing just a low-cost manufacturing platform.


 » Environmental analysis.
 » Reasons for consolidation.
 » Reasons for the growing attractiveness of Indian pharmaceutical companies as targets for M&A deals.


In 2007, US generic drugs major Mylan Inc. (Mylan) acquired the fourth-largest generic pharmaceutical company, Merck KgaA’s generic unit. This established Mylan as the world’s third-largest generic drugs company with a combined sales of US$4.2 billion (in 2006), behind Teva Pharmaceutical Industries Ltd. (Teva) and Sandoz .

Analysts said that the industry was witnessing a trend towards acquisitions and consolidation...

Questions for Discussion:

1. What, according to you, are the reasons for the consolidation in the global generics drugs industry? What benefits are being derived by the companies undergoing this M&A deals?

2. Why, according to you, are the global generic drugs companies eyeing Indian pharmaceutical as prime targets for M&A deals?

3. Do you agree with analysts that acquisition by global generic drugs companies would be beneficial for Indian pharmaceutical companies? Give reasons for your answer.

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1. Mylan's Acquisition of Matrix
2. The betapharm Acquisition: DRL's Strategy of Inorganic Growth in the US
3. Ranbaxy's Globalization Strategies and its Foray into the US