Chasing α in AH Industry in India - M&As Galore

Value lies in the eye of the investor – this applies perfectly well to the relatively small but steadily growing animal health industry in India.

With an expected market size of US $ 600 Million (end-2015E) and largely low priced generics market, not much would be expected on the M&A front but the local industry continues to receive far higher share of the attention – thanks to the availability of cheap funds.

Following the trends in potentially more attractive and much larger in size Human Pharmaceuticals, Animal Health has witnessed far too many Mergers & Acquisitions disproportionate to the size of industry, since 2000 and the trend may well continue in the future.

Few key reasons for an increased interest in Indian AH Industry are:

  1. Burgeoning population and increasingly wealthy middle class may continue to embrace animal proteins at a faster clip despite the recent controversies around beef in the market

  2. India remains the bright spot among Ems despite not so much ease of doing business, promises by the federal govt. notwithstanding

  3. Entry barriers especially for International AH companies with portfolios of drugs and vaccines – slower and predictably unpredictable regulatory processes have ensured that M&As are a faster way

  4. Lastly and importantly – success in this relatively small but nonetheless important market depends upon the speed and efficiency in new product launches in small pack sizes and at Indian prices – none of which is possible by an impot model, hence interest in M&As

Contrary to the expectations, local Indian companies continue to outbid MNCs in acquiring available targets. Expansions and consolidation through M&As remain the top reasons for putting available easy money to good use.

Following is a not so exhaustive list of some of the major M&As’ that local AH Industry has witnessed. This list does not include any international M&As among International AH companies and the local impact thereof:

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