Indian pharma ramps up US acquisitions amid regulatory and market shifts

Indian pharmaceutical companies are aggressively expanding their US presence through a wave of acquisitions, likely as a hedge against future uncertainties. Leading players like Sun Pharma, Syngene, Senores, and Zydus have all made strategic purchases, reflecting a broader industry shift.

Analysts and insiders see this trend as a move to scale operations, optimise costs, and maintain profitability amid tightening USFDA regulations. Additionally, the rising demand for biosimilars and specialty drugs has also encouraged acquisitions, as companies seek to reduce their dependence on traditional generics.

Driving factors behind the wave of acquisitions

Prof Vivek Padgaonkar, Independent Director, ENTOD Pharmaceuticals attributes the growing confidence among Indian firms in navigating the USFDA’s regulatory framework, to the rise in acquisitions. He also noted that companies are diversifying their product portfolios, making it easier to expand through acquisitions.

For instance, Sun Pharma’s acquisition of Checkpoint Therapeutics for $355 million highlights its efforts to enhance its oncology and immunotherapy portfolio, said Vivek Tandon, VP of Primus Partners, and Nilaya Varma, CEO & Co-Founder of Primus Partners.

Another significant factor is the US patent cliff, where blockbuster drugs lose patent protection creates opportunities for Indian firms to launch generics and gain first-to-file exclusivity, added Padgoankar.

Meanwhile, the Large Group Purchasing Organisations (GPOs) and Pharmacy Benefit Managers (PBMs) have squeezed the margins of suppliers. As a result, Indian pharma companies see mergers and acquisitions as a way to gain scale, optimise costs, and maintain profitability, noted Hari Kiran Chereddi, MD & CEO, HRV Global & NHG Pharma.

Post-COVID supply chain disruptions have further pushed firms to secure their supply chains. Many Indian players are investing in Active Pharmaceutical Ingredient (API) production and backward integrating their supply chains. Acquiring Contract Development and Manufacturing Organisations (CDMOs) or Contract Manufacturing Organisations (CMOs) has become a key strategy, Chereddi added.

This expansion strategy mirrors the IT industry’s playbook from 15–20 years ago when Indian IT firms acquired US-based companies to establish a strong geographical presence.

Challenges

While acquisitions bring long-term benefits, they also pose financial risks. Expanding into the US aids Indian pharma companies to expand market, and revenues. However, owning a manufacturing facility in the US does not entirely eliminate regulatory challenges, as even domestic plants must comply with stringent FDA regulations, noted Chereddi.

Additinally, US-based pharma assets often command premium valuations, making acquisitions expensive but strategically significant, he added.

Integration challenges, including differences in work culture and operational processes, can slow expected synergies. Even with higher sales, profit margins may shrink due to intense competition in the US generics market.

Additionally, regulatory risks persist, with compliance issues, warning letters, or approval delays potentially disrupting business, Padgaonkar explained. “Many deals also involve high debt, which can strain financial health and limit future investment opportunities. As the US generics market faces price erosion, maintaining profitability while expanding operations remains a key concern,” he said.

Future Outlook

Analysts and industry players point out that the trends of acquisitions is expected to continue in the short to medium term, particularly in complex generics and biosimilars.

“As more blockbuster drugs lose patent protection, Indian firms are likely to acquire companies to strengthen their market position. However, certain macroeconomic factors could slow this momentum. Higher interest rates and rising capital costs may make deals less financially attractive. Stricter regulatory compliance could further deter aggressive expansion. Additionally, if generic drug prices in the US continue to decline, some acquisitions may no longer be profitable,” observed Padgaonkar.