By Bruce Japsen | Abbott Laboratories said it will pay $3.72 billion for a unit of drug
giant Piramal Healthcare, a maker of popular generic medicines in
emerging markets, in a deal that will establish it as the largest
seller of prescription drugs in India.

The North Chicago-based drug giant said the move to buy Piramal’s
Healthcare Solutions business allows Abbott to tap into the
second-largest country and one of the fastest growing markets in the
world. Pharmaceutical sales alone in emerging markets are growing three
times the rate of developed countries, say industry analysts.

“Emerging markets represent one of the greatest opportunities in health care — not only in pharmaceuticals — but across all of our business segments,” said Abbott chairman and chief executive officer Miles White. “Today, emerging markets represent more than 20 percent of Abbott’s total business.”

In Piramal, Abbott will gain a host of so-called “branded generic” medicines that have lost patent protection in India yet remain top sellers due to loyalty to the original brand name medication.

Analysts at Bernstein Research in New York called the deal part of Abbott’s “next leg of growth,” particularly should sales slow for blockbuster product’s like the company’s flagship drug Humira for rheumatoid arthritis and other autoimmune conditions. Humira accounts for more than $4 billion of Abbott’s total annual sales of $30 billion. 

Abbott has already made in-roads into India, a market of 1.1 billion people and at least $8 billion in annual pharmaceutical sales that analysts estimate will double by 2015.

Earlier this month, Abbott signed a deal with India-based Zydus Cadila of India to sell a portfolio of the India company’s drugs, including generic medicines, in 15 emerging markets.

Abbott has also created a stand-alone “Established Products Division” that is designed to tap into emerging markets. The new business will be led by 20-year Abbott veteran Michael Warmuth, who most recently has been head of the North Chicago-medical product giant’s diagnostics business.

Terms of the Piramal acquisition call for Abbott to pay to $2.1 billion upfront followed by payments of $400 million annually for four years.

“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,” said Ajay Piramal, chairman, Piramal Group.