The last few months have seen a sizable number of Big Pharma companies showing interest in Indian injectible firms. Last month, Mylan bought Strides Arcolab's injectable drug unit for $1.6billion, paying the highest sales multiple ever for an Indian pharmaceutical company. And now according to Bloomberg, India-based Claris Lifesciences may be next in line to be taken over by one of the pharma giants. Rumors have it that Pfizer and Teva Pharmaceutical Industries have shown interest in acquiring this Ahmedabad-based company which has five manufacturing facilities in Ahmedabad and approval to ship drugs to the US.
Sources say that the companies in question are gearing up to combat the shortage of medicines in the US through acquiring companies with approved manufacturing facilities. In 2011, there were 251 drug shortages reported in the US, out of which 183 involved sterile injectable drugs as reported on the FDA website. The agency believes that a major reason for these shortages has been quality issues apart from other issues such as production delays, etc. FDA acknowledges the fact that with fewer firms making older sterile injectable drugs, there are a limited number of production lines that can make these drugs. This small number of manufacturers and limited production capacity for sterile injections result in drugs being vulnerable to shortage and thus prompting the big pharma to bridge this shortage gap by acquiring the injectables unit.
Manufacturing injectable drugs require sterile facilities to protect against unwanted contaminants and the FDA in the US has cracked down on manufacturers that fail to meet safety requirements. Mr Srinivasa Rao Aluri, managing director, Morgan Stanley, in a telephonic interview said, "The interest in buying injectables unit is high because FDA shut down a number of sterile facilities in the US so now these companies do not have sterile facilities to combat the contaminants and this pressure is making them acquire injectables unit from other FDA approved companies." In 2012 itself, FDA had sent 22 warning letters to number of companies.
Ms Mridula Anand, researcher, Centre for Leadership, Innovation and Change, ISB believes that "With few players catering to niche segments, the injectables market poses high entry barriers to pharma and biotech companies. While due to stringent guidelines there are few FDA approved injectable manufacturing units in the US, the demand for sterile injectable drugs are growing. It is but natural for global firms to look towards India which have 'ready-to-run' sterile injectable drug manufacturing facilities."Claris in 2010 was barred from selling its products in the US after the US agency found that the company was producing contaminated drugs. Claris, however, resolved the issue in 2012 and addressed the complaints following which it was allowed to resume US sales. Recently the company also got FDA approval for its ninth drug.
Pharma companies are constantly evaluating options for new innovative products while maintaining stringent quality. Firms such as Claris, Cadila, Dr. Reddy's and Sun Pharma have developed strong manufacturing capabilities for injectables. Ms Anand further says "Claris has built capabilities across most verticals with a global presence and extensive regulatory approval experience which could prove valuable."