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The Great Indian Pharma Consolidation: A Strategic Imperative for Global Ambition

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The Indian pharmaceutical industry, long characterized by its formidable generic manufacturing capabilities, has decisively entered a robust phase of consolidation. In a landmark development, Torrent Pharmaceuticals has announced definitive agreements to acquire a controlling stake in JB Chemicals & Pharmaceuticals for an equity valuation of ₹25,689 crore. This momentous deal, one of the largest in Indian pharma history after Sun Pharma’s acquisition of Ranbaxy, will significantly reshape the domestic landscape and propel the combined entity into the top tier of Indian pharma.

The acquisition, structured in two phases and involving a subsequent merger, underscores the ongoing, aggressive drive within the industry to achieve greater scale, enhance market reach, and diversify product portfolios through strategic mergers and acquisitions (M&A). This move by Torrent not only bolsters its presence in chronic therapy segments and opens up new areas like ophthalmology but also marks its entry into the high-potential Contract Development and Manufacturing Organization (CDMO) space.

Evolution through M&A: A Snapshot:

Historically, the Indian pharma landscape was characterized by a large number of small to medium-sized companies, primarily focused on generic drug manufacturing for the domestic market. The liberalization of the Indian economy in the early 1990s and the adoption of product patents in 2005 spurred a wave of M&A activities.

Key examples of this evolution include:

- Sun Pharma’s acquisition of Ranbaxy (2014): This landmark $4 billion deal was one of the biggest in Indian pharma, creating a powerhouse with a vast product portfolio and global reach. It aimed to expand market penetration and diversify product lines, as both companies had complementary strengths.

- Abbott’s acquisition of Piramal Healthcare’s domestic formulations business (2010): This significant inbound M&A deal showcased the interest of global giants in the lucrative Indian domestic market and its strong generic capabilities.

- Daiichi Sankyo’s acquisition of Ranbaxy (2008) and its subsequent sale to Sun Pharma: This demonstrates both the influx of foreign investment seeking access to low-cost R&D and manufacturing, and the eventual re-consolidation within Indian hands.

- Lupin’s numerous outbound acquisitions: Lupin has actively acquired companies in the US (e.g., GAVIS Pharmaceuticals in 2015) and Russia (ZAO “Biocom”) to expand its international footprint and product offerings, particularly in key markets.

- Mankind Pharma’s acquisition of Bharat Serums & Vaccines (2024): This recent deal highlights the strategic intent of Indian companies to diversify into high-growth segments like biologics and specialty care.

Increasing Dominance of Top Companies:

While precise historical market share data for the top 10 over many decades is complex to aggregate, the trend is clear: consolidation has significantly increased the contribution of the top pharmaceutical companies to the total market.

Today, companies like Sun Pharmaceutical Industries, Divi’s Laboratories, Cipla, Dr. Reddy’s Laboratories, and Torrent Pharmaceuticals are consistently at the top of the market capitalization and revenue charts. For instance, as of June 2025, Sun Pharma alone holds a substantial market share, and the top 10 companies collectively command a significant portion of the overall Indian pharmaceutical market. This is a stark contrast to the highly fragmented landscape of previous decades where market leadership was far less concentrated. The proposed Torrent-JB Chemicals merger is expected to further solidify this trend, potentially placing the combined entity among India’s top five pharma companies by market capitalization.

An Assessment: Benefits and Challenges:

Experts generally agree that this consolidation has benefited the Indian Pharmaceutical industry in several ways:

- Enhanced Scale and Efficiency: Larger entities can achieve economies of scale in manufacturing, R&D, and distribution, leading to cost efficiencies and improved profitability.

- Global Competitiveness: Mergers have enabled Indian companies to expand their geographical reach, acquire advanced technologies, and strengthen their product pipelines, making them more competitive on the global stage. India is now the third largest in production volume and a major supplier of affordable generics and vaccines worldwide.

 - Increased R&D Investment: While concerns about innovation decline post-merger exist, larger companies often have greater financial muscle to invest in research and development, particularly in high-value areas like biologics, biosimilars, and specialty drugs, moving beyond traditional generics.

- Improved Quality and Compliance: Consolidation can lead to better adherence to stringent international quality standards (like USFDA and EU-GMP), as larger companies have the resources and infrastructure to implement robust quality control measures.

- Portfolio Diversification: M&A allows companies to broaden their therapeutic areas and product offerings, reducing reliance on a few key drugs and mitigating risks. The potential acquisition of JB Chemicals would add several established domestic brands to Torrent’s portfolio and also provide an entry into the Contract Development and Manufacturing Organization (CDMO) business.

Challenges and potential downsides also exist:

- Potential for Reduced Competition (in specific segments): While the overall market may not be concentrated, specific therapeutic categories or drug molecules can experience high concentration ratios, raising concerns about potential monopolistic practices and impact on drug affordability.

- Innovation vs. Cost Savings: The focus on integration and cost synergies post-merger can sometimes lead to a reduction in R&D spending or the elimination of overlapping research projects, potentially impacting overall innovation in the short term.

- Impact on Smaller Players: Consolidation can make it harder for smaller, independent players to compete, potentially stifling new entrants and diverse approaches to drug development.

Defining the Strategic Imperatives:

As of today, the Indian pharmaceutical industry is poised for continued growth and evolution, with the following key trends and strategies envisaged:

- Focus on High-Value Products: The industry is actively shifting from a heavy reliance on generic formulations to investing in complex generics, biosimilars, biologics, and specialty drugs, which offer higher margins and greater innovation opportunities.

- Strengthening API and KSM Manufacturing: To reduce import dependence, particularly on China, there’s a strong push for self-reliance in Active Pharmaceutical Ingredients (APIs) and Key Starting Materials (KSMs) through government initiatives like Production-Linked Incentive (PLI) schemes.

- Digital Integration and Technology Adoption: Leveraging digital technologies, AI, and data analytics in R&D, manufacturing, supply chain management, and patient engagement is crucial for future growth and efficiency.

- Global Collaboration and Partnerships: Strategic alliances, joint ventures, and targeted acquisitions, both inbound and outbound, will continue to be vital for market access, technology transfer, and portfolio expansion.

- Quality and Regulatory Compliance: Continued emphasis on stringent quality control measures and adherence to global regulatory standards is paramount to maintain India’s reputation as a reliable pharmaceutical supplier.

- Talent Development: Addressing skill gaps and fostering a highly skilled workforce, particularly in areas of advanced research and digital technologies, will be critical for sustained growth.

Conclusion: 

The Indian pharmaceutical industry’s journey of consolidation has largely been a positive one, fostering scale, global competitiveness, and increased R&D capabilities. The path ahead involves a strategic shift towards innovation, self-reliance in key materials, and leveraging technology to solidify its position as a global pharmaceutical leader, with ongoing M&A activities like the potential Torrent-JB Chemicals deal serving as key catalysts in this transformative journey.

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

The Indian Drug Industry’s Looming Talent Crisis – A Recent Landscape

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India’s pharmaceutical industry, a global generics and drug manufacturing powerhouse, is facing a critical talent deficit. The shortage of skilled professionals is impeding innovation, drug development, and the industry’s overall competitiveness.

This challenge, exacerbated by recent industry dynamics, demands immediate attention to unleash the sector’s full potential. In today’s article, I shall dwell on this area.

Talent challenges and focus areas:

The industry is facing a significant talent crunch. Here’s a breakdown of the key challenges with recent, specific examples:

1. Skill Shortage:

The industry demands expertise in areas like regulatory affairs, data science for clinical trials, biosimilars, and gene therapy. However, the current education system and skill development programs haven’t kept pace with this evolving landscape.

Example: A 2023 report by TeamLease points out a growing demand for professionals with expertise in regulatory affairs, particularly, those adept at navigating international regulations for drug approvals. This is crucial as Indian companies increasingly target overseas markets.

2. The Great Resignation Impact:

Example: A 2024 article in The Economic Times highlighted a recent exodus of mid-level managers from several Indian pharma companies. The report cited factors like stagnant salaries, lack of growth opportunities, and a competitive job market as reasons for the increased job hopping.

3. Competition for Talent:

Example: A recent news piece in BioSpectrum Asia (May 2024) discussed the fierce competition for experienced professionals in the biosimilars space. Companies like Biocon and Reliance Life Sciences are aggressively hiring and offering lucrative packages to attract top talent in this rapidly growing field.

4. Lack of Industry-Academia Collaboration:

Example: A joint report by FICCI (Federation of Indian Chambers of Commerce and Industry) and Ernst & Young (2023) highlighted the growing gap between the skills taught in universities and the practical needs of the pharma industry. The report urged closer collaboration between industry and academia to ensure curriculum updates reflect current industry requirements.

5. Diversity Issues:

Example: A 2024 study by Express Pharma revealed that despite comprising a significant portion of the workforce, women hold only around 15% of leadership positions in the top 20 Indian pharmaceutical companies. This highlights the need for targeted initiatives to promote women into leadership roles.

In such a scenario, some may obviously ask, what is my recommendation or the ways some companies are trying to address this issue. Here below is my prescription:

A prescription – A Multi-Pronged Approach, with Indian examples: 

Re-skilling and Up-skilling:

Example: Dr. Reddy’s Laboratories, reportedly launched targeted training programs to equip existing employees with data science skills for clinical trial design and analysis. This approach empowers the current workforce and addresses the immediate skill gap.

Industry-Academia Collaboration:

Example: Lupin, as reported, partnered with IIT Delhi to establish a joint research center focused on drug delivery systems. This collaboration bridges the gap between academic knowledge and industry applications, better preparing graduates for real-world challenges.

Fostering Diversity and Inclusion:

Example: According to reports, Biocon’s “Women in Biopharma Leadership” program provides mentorship, training, and networking opportunities for aspiring women leaders. This initiative tackles the under-representation of women in leadership roles and unlocks the industry’s full talent potential.

As I discussed in my earlier article, ‘Diversity And Inclusion: A Missing Link For Indian Pharma‘ (June 25, 2018), the Indian pharma industry faces a critical talent shortage.

Building a Strong Employer Brand:

Example: Companies like Cipla can invest in employer branding initiatives to showcase their work culture, growth opportunities, and commitment to diversity. This can attract talent seeking a fulfilling career path and a positive work environment.

Leveraging Technology: Implementing AI-powered talent acquisition platforms can streamline recruitment processes and identify suitable candidates from a wider pool, including those from non-traditional educational backgrounds.

Conclusion:

By addressing these challenges through strategic investments in skill development, nurturing industry-academia partnerships, and fostering a more inclusive work environment, the Indian pharmaceutical industry can build a robust and future-proof talent pool. This will be equipped to drive innovation and ensure its continued success in the global market to maintain its competitive edge, sustainably.

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

 

‘Jan Aushadhi’ – ‘Medicines for the common man’ project of DoP is a great idea – is it on course?

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In mid 2008 The Government of India created a new department, ‘The Department of Pharmaceuticals’ (DoP), under the Ministry of Chemicals and Fertilisers. The new department came out with its following vision statement:“To enable Indian pharmaceuticals industry to play a leading role in the global market and to ensure abundant availability, at reasonable prices within the country, of good quality pharmaceuticals of mass consumption.”‘Jan Aushadhi’ – ‘Medicines for the common man’:

In this article, I shall submit my point of view on the second part of the above vision statement, which articulated the responsibility of the department to ensure availability of affordable modern medicine for ‘mass consumption’.

When over 70% of Indian population lives in rural areas, one can quite easily assume that such medicines will be available adequately in rural areas of the country, as well. Obviously the question that follows this admirable vision statement is how?

To respond to this question one will try to address the following two basic strategic issues:

1. Create a workable and viable business model, which can be gradually developed over a period
of time to deliver the promise

2. Create a robust supply chain network to ensure easy access of these medicines to the common
man, located even in remote rural areas.

The first part of the strategic issue has been well addressed by the DoP, within a very short period, by creating ‘Jan Aushadhi’, the medicines for the masses. Importantly, the second point, which will determine the success of the project, has not been clearly articulated.

The objectives of the ‘Jan Aushadhi’ were stated as follows:

1. To promote awareness for cost effective quality generic medicines. (However, how exactly this will be done, is yet to be known.)

2. To make available unbranded affordable quality generic medicines through private public partnership (PPP). (I support this objective from procurement perspective. However, so far as the delivery of these medicines to the common man is concerned, I would argue below:why do we reinvent the wheel?)

3. To encourage doctors in the Government Hospitals to prescribe such cost effective quality
generic medicines. (This is again just a statement of intent without considering the critical issue of its implementation in the predominantly branded generic market, like India.)

4. To help patients save significantly towards medicine cost with ‘Jan Aushadhi’ outlets.

5. A national help line is believed to be able to increase awareness level of this initiative.

The statements of intent of the DoP also highlight that the State Governments, NGOs and Charitable bodies will be encouraged to set up such generic medicine shops. It also states that the existing outlets of the Government and NGOs may also be used for this cause.

This particular decision of DoP, as I stated before, appears to be an attempt to ‘re-invent the wheel’, as it were. I shall argue on this subject, very shortly.

An open ended launch plan with inadequate market penetration compared to set objectives:

DoP announced that this scheme will be launched gradually in all the districts of India in four phases. However, for some unknown reasons, besides phase one and two, the other two phases of the launch plan have been kept by the department, as open ended as it could be, despite the Government of India’s having all wherewithals to implement this scheme with a reasonable degree of preciseness.

The four phases were decided as follows:

1. Phase 1: Amritsar Civil Hospital in November 8, 2008

2. Phase 2: Few stores in Delhi, National Capital Region (NCR), district hospitals in Mohali,
Ludhiana, Bhatinda and Jalandhar by February 28, 2009

3. Phase 3: Other districts of Punjab and some other states to be covered during 2009 and
2010

4. Phase 4: Remaining districts of the country by 2010 and 2012

I am not surprised that with such vague launch plan and an open ended timeline, the Government seems to have faltered in Phase 2 itself, when it could not go beyond Amritsar and Shastri Bhavan, Delhi outlets, by February, 28, 2009.

Arguing for the need of a course correction:

Despite being a hardcore optimist, I now get a vague feeling that the ‘Jan Aushadhi’ scheme of the DoP may not ultimately be able to achieve its cherished goals and may remain just as another good intention of the Government of India, if a course correction is not made at this stage.

The key barrier to improve access to affordable quality generic medicine to the common man, in this particular case, is not conceptualization of a project. We all know that our Government is reasonably good at it, with a good number of brilliant minds working to give a shape to it. The main weakness to translate this laudable idea into reality, in my view, falls well within the general weakness of the Government in visualizing the key barriers to the project and at the same time missing out on some of the key drivers for the same.

In this case, there seems to be some flaw in the ‘ideation’ stage of the project, as well. This flaw lies with the plan of its delivery mechanism involving state government, NGOs and various other bodies.

If procurement of cost effective quality generic medicines is not an issue, then the DoP should carefully look within the Government system to ensure easy access of such medicines to the common man.

Two grossly underutilized Government controlled ‘mass delivery systems’:

The Government of India has two very unique product distribution and delivery systems within the country with deep penetration from metro cities to even far off rural areas. These two Government owned supply and delivery chains are as follows:

1. Public Distribution System (PDS) for food grains and other essential commodities (Ration shops).

2. Indian Post Offices

Like food grains, medicines are also essential items. Why then DoP not collaborate with PDS to ensure easy access of such medicines to the common man?

Similarly, when postal department are collaborating with various other agencies to sell and distribute many types of products in rural areas, why not DoP consider this alternative, as well?

In fact, I would strongly recommend usage of both PDS and Post Offices by the DoP for deeper penetration of such medicines especially for the benefit of those 650 million people of India who do not have any access to affordable modern medicines.

I am aware, the question of ‘in-efficiency’ of these systems may be raised by many in India. However, at the end of the day who is responsible to make these systems efficient? People responsible for managing a system or process are usually held accountable for its ‘efficiency’ or ‘inefficiency’.

We have many excellent minds in the DoP, I hope, they may wish to explore the possibility of effectively utilizing these two already available state controlled mass distribution systems to ensure success of the project “Jan Ausadhi” – “Medicines for the common man”.

It is worth noting that this project seems to have already started limping with its vague execution plan and a delivery system, the scaling up of which to ensure access to one billion population of our country could be a serious question mark.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.