Ranbaxy plans local buyouts

Ranbaxy Laboratories, the country's second-biggest drugmaker by market value, plans to buy companies in India, a market that is expected to rank among the world's biggest in the next eight years.

"We would certainly acquire a couple" of drugmakers, Malvinder Singh, chief executive officer of the Gurgaon-based company, said in an interview at the World Economic Forum in Dalian, China. The Indian market is expected to see "a good amount of consolidation" in the next five years, he said.

India's pharmaceutical market may surge to $20 billion by 2015 from $6.3 billion a decade earlier, overtaking Brazil, Mexico and Turkey to rank among the world's 10 largest as rising incomes and a diabetes epidemic spur demand for drugs, McKinsey & Co said last month in a report.

The country's patent laws were tightened in January 2005 to recognise product patents and stop the copying of medicines patented after 1995 by using a different manufacturing process.

That may hurt drugmakers which aren't engaging in new drug research or those that don't have a strong generics business overseas, making them acquisition targets.

"Small and mid-sized companies will find it tougher to survive in this environment," said Sarabjit Kour Nangra, an analyst with Angel Broking in Mumbai. "New product introductions are going to come down, which will cap their growth."

Singh, 34, said in September that Ranbaxy may buy drug-ingredient makers in India. That would help it lower costs and increase its capacity to sell generic medicines in the US and Europe. Active ingredients account for about 80 per cent of the 24-year-old company's production costs.

The drugmaker is also setting up a new plant in India that will make medicines for overseas markets, said Singh today.