Reasons for the surge in M& A in healthcare and pharmaceutical sectors in India: Ankit Poddar & Navroz Mahudawala, Candle Partners

Reasons for the surge in M& A in healthcare and pharmaceutical sectors in India: Ankit Poddar & Navroz Mahudawala, Candle Partners

Witnessing sizable consolidation (M& A) activity with Domestic Formulations and Hospitals being two areas wherein maximum M&A has occurred.

  • By IPP Bureau | September 22, 2022

The year 2021 was a mixed bag year for the health sciences sector with substantial fund-raising activity witnessed in the healthtech side & muted activity in the traditional areas of Pharmaceuticals & Healthcare Services. In the year gone by till date (2022), we are witnessing sizable consolidation (M& A) activity with Domestic Formulations and Hospitals being two areas wherein maximum M&A has occurred.

We present below some of our thoughts on the recent M& A activity across the sub-sectors of Healthcare and Pharmaceutical.

Large Scale consolidation in the Hospital sector after a muted 4-5 years of M&A activity

While funding activity has been strong for the last 3-4 years, we saw limited consolidation activity. This has changed over the last 12-18 months. This has been driven by specific factors.

1) Emergence & creation of hospital platforms like Marengo created by Samara Capital

2) The sector now achieving a scale & maturity wherein private equity funds have been comfortable owning and running hospitals successfully (KKR / Max & Everstone / Sahyadri deals)

Hospitals stocks were re-rated during covid with improving operational performance. This has also led to valuations being attractive for several players to evaluate meaningful exits.

We saw several different types of consolidation activity –

1) Single location hospitals being attractive targets (CIMS by Marengo, Vikram Hospital by Manipal)

2) Regional leaders being acquired by large private equity players (Sahyadri Hospitals by Ontario Teachers Pension Plan & Sterling Hospitals by Arpwood PE)

3) Eyecare emerging as a key speciality with larger Private Equity taking significant minority stakes in the two large chains (GA & Kedaara’s investment in ASG, TPG & Temasek’s investment in Dr Agarwal’s)

Substantial M& A activity in domestic formulations sector over the last 12 months

The last 12 months has seen substantial consolidation activity being witnessed in the domestic formulations sector. Most larger companies refocused back on the domestic market after the continued under-performance in the USA markets. The most aggressive acquirers have been private equity funded or private equity owned companies



Brand/ Segment Acquired

Anglo-French Drugs select portfolio

Lupin Ltd.

Vitamins, minerals, supplements and neurological products


Eris Lifesciences

Largely dermatology

Panacea Biotec


Mankind Pharma

Chronic and transplant



JB Chemicals & Pharmaceuticals

Probiotics &Reproductive health

Dr Reddy’s select brands

JB Chemicals & Pharmaceuticals

4 brands of DRL in Paediatric

Jagsonpal Pharma

Convergent Finance


Controlling stake in the company

Novartis (Cidmus)

Dr Reddy’s Laboratories


Sanofi Encube


Anti-microbial – Soframycin


Indiabulls Pharma business

Linux Labs

Dermatology & Critical Care

With 2-3 other large businesses also in the fray, we expect the consolidation activity to continue in the domestic formulations sector over the next few quarters

Within healthcare, for diagnostics 2021 was a massive year of consolidation; however there has been limited activity in 2022

● With 3 large M&As (Pharmeasy/Thyrocare, Dr Lal’s / Suburban and Metropolis – Dr. Ganeshan’s Hi-Tech) & select fund raising (Tata Cap / Atulaya Healthcare, Morgan Stanley / Sterling Accuris, Accel invested in Orange Diagnostics) diagnostics witnessed max action in 2021. The year 2022 has seen a substantial slowdown in M&A; however, select fundraising deals continued (Tata Capital’s investments in Aarthi Scans & Anderson Diagnostics; Motilal Oswal’s investment on Pathkind)

● The competitiveness in the diagnostics sector has increased significantly, with several Hospital chains focusing on Diagnostics (viz., Manipal, Max Healthcare, Medicover, Sahyadri Hospitals) along with several deep pocket corporate houses investing heavily in Diagnostics (Pathkind by Mankind family, Unipath by Intas family, Lupin Diagnostics, Rivaara Labs by erstwhile Bharat Serums promoters, Neurberg by Dr. Velu). The expected pricing challenges from the tech players like 1 MG and Pharmeasy has made most capital market analysts nervous and we have seen approx. 35-50% reduction in market caps of almost all listed companies.

Select activity witnessed in APIs, Excipients & Allied Pharmaceutical services space We saw several transactions in the excipients (manufacturing / distribution), nutraceuticals and CRO space in 2021 & some of the activity continued in 2022 too. We expect the consolidation in excipients and API businesses to continue in the months to come.

● Advent API platform buying Avra Laboratories

● La Renon bought a controlling stake in Enaltec, giving it an entry into APIs

● IFC & EAF buying stakes in Multiples controlled Zenex Animal Health (bought from Zydus)

● Invascent PE picking a significant minority stake in Malladi Drugs

By Ankit Poddar & Navroz Mahudawala

(The authors are senior professionals in Candle Partners. While Ankit Poddar is a Director & leads the Healthcare Practice; Navroz Mahudawala is the founder of the firm)

Upcoming E-conference

Other Related stories