According to a research report published by CARE Ratings, it was observed that some of the global top PE players have evinced interest in Indian Pharma players. Some of the notable PE deals during CY2020 and H1CY2021 include – KKR acquiring 65% stake in J.B. Chemicals and Pharmaceuticals Limited, Carlyle acquiring 20% and 74% stake in Piramal Pharma and SeQuent Scientific Limited, respectively, and Advent International acquiring almost 100% and 80% in RA Chem Pharma and ZCL Chemicals Limited, respectively. Other large global PE players that were active during the said period were Goldman Sachs, ChrysCapital, True North, etc.

Many of these top PE players have their stakes in other pharma players across the globe. Thus, it is expected that the global experience of these players combined with their global network and operational expertise would eventually act as the catalyst for the overall growth of the industry.

According to Care Ratings, the main factors that are expected to drive the growth of the industry is its ability to leverage opportunities due to patent expiry, ebbing of regulatory risk, less dependence on China and solid fundamentals of the industry. This in turn will make the Indian pharma space attractive for PE investments. 

The Indian domestic pharma market which was at about US $18 bn during FY17 has exhibited a CAGR of about 4.5% to reach US $ 21 bn during FY21. Further, the pharma exports which contributed about US $ 17 bn during FY17 have reported a CAGR of about 10% to reach US $ 24 bn during FY21. Especially during FY21, on account of the increase in the demand for Covid-19- related drugs, the exports have grown by 18%. Thus, on account of a better export growth rate, the contribution of domestic to exports has changed from 52:48 during FY17 to 47:53 during FY21. CARE Ratings expects that with better prospects in regulated and semi-regulated markets, the contribution of domestic to exports would widen to 45:55 by FY23.

Finally, CARE Ratings expects the industry to grow at about 11% in the next two years and reach a size of over US $ 60 bn.