PHARMACEUTICAL companies are spending record amounts on acquisitions in emerging markets, with China the most attractive target nation, reflecting sharply rising sales of western medicines in the country.
Overall expenditure by both overseas and domestic pharmaceutical companies in emerging markets has reached $20 billion (R173bn) so far this year, up two-thirds on last year’s total, Thomson Reuters data show.
An analysis of year-to-date deals by law firm Freshfields Bruckhaus Deringer, published yesterday, showed China accounted for $6.8bn of the total.
Spending by overseas acquirers alone in key growth markets is running at $3.5bn so far this year, an increase of 95 percent on last year.
The sharp upturn in emerging market activity contrasts with an overall decline in pharmaceutical mergers and acquisitions (M&As) worldwide to $146bn from $225bn last year.
After a flurry last year, which took deal-making back to pre-recession levels, drug companies have been wary of hitting the takeover trail in a big way in Western markets this year.
“Instead, pharma investments in fast-growing economies are gathering steam,” Freshfields corporate partner Jennifer Bethlehem.
“While M&A is an expensive remedy, ‘pharmerging’ markets are obvious investment choices for cash-rich drug companies.”
Emerging markets are expected to account for the bulk of growth in the global pharmaceuticals market in the next few years, as sales in Europe and the US slow due to a wave of patent expiries. – Reuters