Abbott buys Piramal unit for $2.12 billion

Abbott Laboratories has signed an agreement with IndiaÔÇÖs Piramal Healthcare to buy its Healthcare Solutions business, a branded generics maker, it has been announced.  Illinois-based Abbott will pay $2.12 billion upfront for the Healthcare Solutions business, plus $400 million annually for the next four years, beginning in 2011. The move gives Abbott the number one position in the Indian pharmaceutical market. Abbott estimates that the growth of its Indian pharmaceutical business will reach 20 percent annually as a result of the deal, with expected sales of more than $2.5 billion by 2020. Approximately 20 percent of Abbott's pharmaceutical sales today are in emerging markets. The Healthcare Solutions unit will become part of Abbott's newly created, standalone Established Products division. The Mumbai-based business has a portfolio of branded generics with annual sales expected to exceed $500 million next year in India, and market-leading brands in multiple therapeutic areas. The business grew 23 percent in 2010 (fiscal year ended March 31, 2010), faster than the market itself in India. Commenting on the deal, Miles D. White, chairman and chief executive officer of Abbott, said: "This strategic action will advance Abbott into the leading market position in India, one of the world's most attractive and rapidly growing markets. Our strong position in branded generics and growing presence in emerging markets is part of our ongoing diversified pharmaceutical strategy, complementing our market-leading proprietary pharmaceutical offerings and pipeline in developed markets." He continued: "Emerging markets represent one of the greatest opportunities in health careÔÇönot only in pharmaceuticalsÔÇöbut across all of our business segments. Today, emerging markets represent more than 20 percent of Abbott's total business.ÔÇØ Ajay Piramal, chairman of Piramal Group, added: "With this deal, the combined Healthcare Solutions and Abbott businesses will become the clear market leader in India, with a market share of approximately 7 percent. This was our collective vision and I am glad that those who are part of Piramal's Healthcare Solutions business will realize this dream." Abbott has estimated that IndiaÔÇÖs drug market will generate almost $8 billion in sales this year and more than double by 2015. The Piramal purchase will build on the US companyÔÇÖs acquisitions in emerging countries to tap demand as growth slows in its home marketÔÇöcurrently the worldÔÇÖs largest for pharmaceuticals. Pharmaceutical sales in emerging markets are expected to grow at three times the rate of developed markets and account for 70 percent of pharmaceutical growth over the next few years. The deal, which is expected to close in the second half of 2010, further boosts Abbott's presence in emerging markets following its recent acquisition of Solvay Pharmaceuticals and the announcement last week of its collaboration with IndiaÔÇÖs Zydus Cadila. Piramal's Healthcare Solutions business employs more than 5,000 people in India; while Abbott has more than 2,500 employees there. Globally, Abbott employs approximately 83,000 people and markets its products in more than 130 countries.