M&A activity to fuel growth for India's pharma sector

Indian pharmaceutical companies will continue to look for mergers and acquisition over the next two-year period to fuel growth, Moody's said. 

Kaustubh Chaubal, a Moody's Vice President and Senior Analyst said, "The drive for overseas expansion comes amid the consolidation of the global pharmaceutical industry, as drug companies look to boost their product and pipeline diversity, scale and pricing power." 

Subrata Ray, Senior Group Vice President, ICRA said, "M&As will also enhance the Indian companies' expertise in sophisticated, high entry barrier products, such as sterile injectables."  

Ray added, "In fact, we expect leading Indian companies to focus increasingly on complex therapy segments such as controlled-release substances, injectables and biologics to plug technology and portfolio gaps."

Emerging markets like Russia, CIS countries, Latin America and Africa, have continued to strong growth opportunities for Indian companies, due to current low healthcare penetration levels and rapidly growing income levels.

Further, they said, the strong financial portfolios of the domestic pharma companies are well capable of large acquisitions because of their ability, for instance, to raise funds.

The report said, average reported EBITDA/interest coverage for the six Indian companies was a solid 20.5x and their average leverage measured by reported debt/EBITDA was 1.29x at 31 March 2016.