PharmExec Blog

Abbott Shells Out $3.7 Billion for Piramal

In July 2009, judging solely by total revenue, Abbott was assigned the rank of the eighth-largest pharmaceutical company in the Fortune Global 500. Nearly a year later, the company is looking to move up at least a few notches. On May 21, Abbott acquired Indian generic giant Piramal for a cool $2.12 billion up front, with additional promised of payments of $400 million for four years starting in 2011. That totals $3.72 billion—money well spent when you take into account the amount of access to India the deal gives Abbott.

The Indian pharmaceutical market is set to grow to $8 billion in 2010—thanks in part to an expanding middle class and the second largest workforce in the world. Generics are dominating the market at a 92 percent share, according to a study conducted by research firm RNCOS. Rather than set up shop and build brands—or even branded generic offerings—from scratch, attempting to squeeze into an already overcrowded space, acquiring an already-established company (like Piramal) is a more cost-efficient step. Abbott anticipates this move will put it at the top of the (very tall) totem pole on the subcontinent.

Piramal doesn’t yet have any proprietary drugs on the market, but it does have several candidates that have either completed or are near completion of Phase II trials. Two oncology targets are being developed with Merck as a partner; Eli Lilly is partner for two in the diabetes/metabolic arena.

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