Japanese drug maker Daiichi Sankyo’s announcement of its plan to acquire Indian generic drug company Ranbaxy Laboratories has observers speculating as to other possible acquisitions in the generic drug market. Such acquisitions would diversify large pharmaceutical firms’ product lines, would allow them to capitalize on government efforts to encourage generic drug usage and would enable them to more effectively compete in emerging nations. Novartis is the only large drug firm that has a generic drug business. Other major drug companies that may be interested in creating such a business, according to analysts, include Pfizer and Johnson & Johnson, as well as other Japanese pharmaceutical companies. Cowen & Co. analysts believe that Mylan, Barr Pharmaceuticals, Watson Pharmaceuticals and Indian generic drug makers are attractive acquisition targets. However, other observers think that generic drug companies’ small earnings and different business model make such acquisitions unappealing to big pharmaceutical firms, and that consolidation within the generic drug market is more likely.

Source: Reuters