Indian CMOs interested in APIs have started expanding as they anticipate a wave of consolidation across the global generics marketplace.

As the merger and acquisition (M&A) activity gathers pace, many Indian players come center stage, either as aggressive bidders or as hotly pursued targets. Intas Pharma’s acquisition of Teva’s portfolio and Baxter’s buy of Claris’ injectables business for $625 million are among the most recent examples to illustrate the trend.

API suppliers, often considered the backbone of the industry, are eager to catch up with this emerging scenario. Apparently, contract manufacturing organizations (CMOs) are readying themselves for the unfolding opportunities by way of beefing up capacities and bridging technology gaps through M&A.

Aurobindo, one of the top API makers in the world, announced the acquisition of Portugal’s Generis Farmaceutica SA from Magnum Capital Partners in January. Generis currently has the largest portfolio in Portugal comprising 200 molecules, according to the company website. Post-merger, Generis and Aurobindo together will have a total portfolio of 271 products in the European nation. Generis also manufactures finished dosage forms for an extensive list of clientele with facilities dedicated for the purpose. 

Aurobindo markets a large variety of formulations across different therapeutic areas, and offers chemistry services as well, through AuroSource, the company’s custom research and manufacturing arm. The Hyderabad-based firm acquired Actavis’ commercial operations in 2014, expanding in EU. 

Strides Shasun, in December last year, entered a definitive agreement with Perrigo API India to acquire a facility located at Ambernath, in the western Indian state of Maharashtra. Having a potential capacity of 600 tons per year, the Perrigo factory holds U.S. FDA approval for products. Israel-based Perrigo API produces finished dosages too, beside APIs.
The Strides deal allows Perrigo to continue to source products from the facility under a long-term supply agreement. The company said it would transfer all the integrated DMFs filed for captive consumption to the acquired facility.

Strides is a source of APIs such as ibuprofen, ranitidine and gabapentin. The company has two manufacturing facilities in India and the UK. To bolster its API division, the Bengaluru-based firm restructured the business into a separate pharma services and active ingredients (PSAI) unit in August 2016. The move followed its merger with Shasun Pharmaceuticals, a rival firm with strengths in APIs, two years back. The API segment contributed nearly a third of the company’s total revenues in 2015-16, according to its annual report. 

“With this acquisition, we bring into our fold a manufacturing facility designed to handle multipurpose small batch productions and accelerates our time to market,’’ the company said in a stock exchange filing.

In August, Piramal Pharma Solutions of Mumbai added its third facility in North America with the acquisition of Ash Stevens. The $42.95 million asset not only expands the Indian contract service provider’s portfolio of offerings but also lends it a clear edge on the sought-after skills in high potency APIs. The U.S.-based Ash Stevens owns 12 FDA approvals for innovator small molecule APIs and pipeline of products at various stages of development.

Piramal Enterprises, the flagship company, started focusing on custom manufacturing after selling off the company’s entire pharmaceutical formulations business to Abbott in 2010.
The contract development and manufacturing organization (CDMO) claims differentiated expertise to manufacture high potency compounds. The company recently unveiled plans to make additional investments to expand its manufacturing facilities at Lexington, KY, including a high speed vial filling machine for handling potent materials.

Piramal also runs accredited manufacturing facilities in Europe and Asia providing drug discovery and development to manufacturing of APIs and finished dosages. The CDMO is reportedly looking for more acquisitions to achieve the required scale.  

Scaling up of capacities to meet the growing demand from the international markets was, again, the stated goal for Torrent’s buy of Glochem’s API unit. Torrent Pharma bought the API factory from Hyderabad-based Glochem Industries along with a few DMFs in June last year.

Located in South India, the acquired factory makes advanced intermediates and APIs. The multi-product facility received clearances from the U.S. and EU regulators and includes development and analytical method development, with a quality control lab and pilot plant. The Vizag plant will become the third API facility for Torrent. Moving forward, analysts forecast M&A is likely to continue as firms look to enhance capabilities and cross-border expansion.