The pharmaceutical companies in India are optimistic about the inbound deals with US this year.
Despite the increasing protectionist tendencies by the US, pharma sector saw 51 deals worth $4.6 billion in 2016.
According to an Ernst & Young (EY) report, outbound and domestic transactions drove most of the deal activity in 2016, with 21 deals each.
In terms of disclosed deal value, the deal size stood at $2.1 billion each.
“Given the recent policy announcements in the US on drug price control, bidding processes for generics, a potential border adjustment tax, and degrees of outsourcing/offshoring by US pharma companies, we remain cautiously optimistic on the US-India inbound deal corridor at this time,” says the report without putting a number.
The report expects 2017 to be a promising year for outbound activity from India to the US, given that US valuations have significantly corrected and there aren’t too many US-based acquirers with adequate financial strength.
As per it, this year could also be good for private equity buyouts in the country as inbound strategic interest is selective.
The Government of India has increased FDI limit in brownfield investments from 49 per cent to up to 74 per cent. “This presents domestic pharma firms with a much- needed opportunity to step in and close portfolio gaps at reasonable prices,” says the report.
Source: Media reports