India is now witnessing acquisitions in the biosuppliers space. In
the two recent deals, US companies have acquired major Indian suppliers
with an aim to strengthen their direct presence in the country
In November 2010, US-based Avantor Performance Materials decided to
acquire New Delhi-based biosupplier company, RFCL Limited. The
acquisition, to be completed by the end of January 2011, is expected to
further boost the product and service offerings of Avantor.
The deal comes after ICICI Venture sold its 85 percent stake in RFCL to
Avantor. In 2005, ICICI Venture acquired RFCL for $22.18-27.73 mn
(
100-125 crore). Now, reports put the current
acquisition deal at $111 mn (
500 crore). This transaction thus marks
the complete exit of ICICI Venture investment in RFCL.
Around the same time, US-based Life Technologies decided to acquire
certain assets of Gurgaon-based LabIndia, a long-time distributor of
its products. The transaction is expected to allow the former to offer
a more complete and complementary line of products directly to its
customers.
Mr Mark Smedley, head of Asia Pacific, Life Technologies, says,
“Our primary goal of acquiring LabIndia is to meet the increased demand
from our customers, and better serve their needs. LabIndia has been a
strong partner and a great steward of the Applied Biosystems brand for
last 20 years, and can be credited for helping us build a thriving
presence in India.”
These two deals will see the increased presence of US-based companies —
Life Technologies and Avantor — in the Indian biosupplier market. Given
the increased government funding to research institutes and the growing
biopharma industry, both the companies are expecting good opportunities
for their growth. Further, these deals are customer-driven allowing
companies to deal directly with them. The understanding of local needs
will help in serving quality-specific products and further delivery on
time.
These two major deals it is expected will begin a trend of foreign
companies acquiring well-established Indian biosupplier companies.
Other Indian biosuppliers have positive sentiment about this
development and think that this acquisition will bring about market
consolidation.
The Life Technologies-LabIndia deal creates a full-service business,
allowing the former to provide its Applied Biosystems products directly
to customers alongwith its Invitrogen portfolio, which includes GIBCO
cell culture products, Lipofectamine transfection reagents, and a
variety of benchtop instruments. Similarly, Avantor will use the RFCL
network in India to push its products in the market, in exchange, RFCL
can benefit from the global experience of Avantor, which can lead to
great improvements in product offerings. Avantor will also expand its
global presence in important geographies and end markets.
With these two deals happening at a time when there is increased demand
for quality research products, it is expected that in the long run, the
ultimate beneficiaries will be the researchers in India.
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“The capabilities of US companies will receive
major boost and
definitely it is the best strategy on their part to enter Indian market
by acquiring the established firms with good market presence.”
— Mr Neeraj Gupta, MD, Imperial Life Sciences |
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“This trend of consolidation will continue.
Major MNCs will continue to
look at Indian market. Everybody wants a piece of growing Indian
market.”
—Mr Rupinder Singh, MD, Biohouse Solutions |
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“The two transactions have revalidated the
potential of the bio lab
supply sector. Post the Qualigen-Thermo Fisher deal, we have not seen
large deals for a while now. I also hope that ‘revalidation’ and
‘re-evaluation’ of this sector encourages Indian entrepreneurs to grow
more aggressively.”
—Mr Arun Prakash, MD, Genetix |
Rahul Koul in New Delhi