Indian pharma sector may undergo major consolidation in key segments

by / Friday, 14 November 2014 / Published in News & Updates

Indian pharma sector is expected to witness a major consolidation within the industry, especially in the API sector to meet the growing market demand and challenges globally, according to Singhi Advisors, a Mumbai based global investment banking firm. Understanding the changing dynamics of the Indian pharma industry, the company expressed keen interest in providing their expertise and services in mergers and acquisitions (M&A) and capital raising initiatives to those interested in expanding their business worldwide.

Interestingly, to get better exposure in the local market, multi-nationals and larger domestic players are understood to be scouting for collaborative initiative with mid market players. Simultaneously, various mid size companies are looking at the possibility of joint ventures and M&As to enhance their chance at getting global acceptance by associating with well established players. Singhi Advisors an expert in this field will be dolling out their expertise in this area by identifying companies with growth potential but low financial and investment backing.

Mahesh Singhi, managing director of Singhi Advisors pointed out this will be a win-win situation for all especially the small and mid market cos as they will be able to get easy access to the required capital, organisational capability and exposure to advanced technologies and processes needed to upgrade their existing capacity, while opening up a great market opportunity both domestically and globally for all the parties. Singhi stressed, “Our focus will be on filling out the gaps prevalent in this area by inward integration of pharma sector by providing wider platform to our clients. This we plan to do by identifying their bottlenecks so that we can help them with proper advice by finding key partners to explore further business proposition for expanding and scaling up their business further.”

Experts inform that low entry barriers in the market have led to rapid growth of unorganised sector in the county resulting in inefficiency and duplicability of the process. Industry insiders feel that such collaborative efforts will help nullifying competition from the local market as small and mid size companies with potential can work out a proposition to either enter into a JV or merge with bigger players, which will be mutually beneficial for all.

Gopal Agrawal, partner, Singhi Advisors informs that their focus will be on identifying such companies who have high potential but lack the technological knowhow to make it into the global market, while at the same time have a very strong base in the local market. “There is a changing trend in the pharma sector, wherein various large and median companies are increasingly coming into focus due to their strong presence in the local or domestic market. This is a great sign as India has lot of mid market or even large companies with high potential who get side tracked due to lack of technological capabilities. With correct knowledge and proper valuation, we can sure integrate the best of both, to boost their business interest in a growing market,” Agrawal stressed.

Singhi Advisors have recently advised two Indian Companies viz Span Diagnostic and Sunways India in identifying strategic investors namely ARKRAY Inc. and Rohto Pharmaceuticals Inc. respectively. Both the strategic investors are from Japan which again is the key focus country with Singhi where they have done five transactions over last one year, being highest by any Advisory firm in India.

The company also plans to focus on applying this strategy in the medical device and biotech sector, as most of the key players in the domestic market especially in the medical device sector belong to the SMEs with a few global giants dominating the market.