In an interesting turn of events, quite a few high profile executives from the pharma world’s big league have been visiting India in the recent months, probably to get a closer look and feel of a much hyped emerging market.

Andrew Witty, chief executive officer of GlaxoSmith-Kline, landed in India in the third week of September. Mr Witty said he “would like to buy something in India” — a $12 billion pharma market bound to achieve critical mass of $20 billion scale and skyrocket to a top 10 pharma market position in the next four or five years, according to a recent report by McKinsey & Company.

Mr. Witty has earmarked funds — as much as $2 billion — for prospective acquisitions in India. That figure may sound small compared to the big-ticket buyouts by pharma giants that have been emblazoning the country’s pharmascape for the past two years. But Mr Witty was very clear when he said he didn’t want to follow the line of other multinationals and pay a huge premium to buy into a market where GSK is already a leader. Nearly one-third of the company’s global volume of products (including consumer goods) are sold in India, at present. At around $1 billion, India sales contribute to nearly 3% of GSK’s total turnover.

India is key in GSK’s emerging markets strategy. Since the company is already an “enviable brand” in India, it didn’t see a need to pay a strategic premium to acquire a target here. “Others might need to do that, but we don’t,” stated Mr Witty. The UK-based drugmaker has an agreement with India’s Dr Reddy’s Lab to source more than 100 generic products.

Race for Supremacy

Days after Mr. Witty’s visit, Chris Viehbacher, chief executive offier of Sanofi, came calling along with a moderately big entourage of senior executives. “I have brought half of my top executive team with me to India to make them understand how important India is to us,” said Mr. Viehbacher.

In fact, Sanofi encountered a bit of a setback sometime ago when the World Health Organization (WHO) refused to certify Shan-5, a pediatric vaccine manufactured by Shantha Biotechnics, an Indian vaccine maker Sanofi bought in July 2009. WHO cited some manufacturing defects in Shantha’s flagship pentavalent vaccine when it denied certification.

Now Sanofi is investing ‘significantly’ in R&D to build Shantha’s Hyderabad manufacturing plant into its global production hub of cost-effective vaccines. The company plans to launch vaccines from its low-cost pipeline over the next two or three years. “You got to have vaccines that are affordable everywhere and Shantha offers us a platform where we can get the cost of production down,” said Mr. Viehbacher.

On the biotech front, the company also has a research collaboration with India’s Glenmark Pharmaceuticals to clinically develop and commercialize a monoclonal antibody to treat autoimmune inflammatory diseases like Crohn’s. The French drugmaker is keen to forge more such research tie-ups with Indian firms.

Sanofi, which markets more today in the emerging regions than in either Europe or the U.S., expects these markets, including India, to contribute 40% of group sales in 2015.

Live Up To Expectations

Apparently, India is a priority for those multinationals looking to salvage their strategies in emerging markets. Figures indicate that the pharmaceutical market in India has been growing at the rate of 12-14% compared to the 3-4% global average.

And companies are getting bullish. At present GSK and Abbott — after acquiring Piramal Healthcare’s generic business — remain on the top of the heap, even as others like Sanofi are steadfastly working to improve their share of India’s market.

A recent report by Bank of America Merrill Lynch shows the top 10 multinationals grew 22% year on year in August 2011. Their sales rose 17% in the past 12-month period. Sanofi, Pfizer, Merck and AstraZeneca lead the growth rally.

Generic makers also are scouting for potential partners in India. Shlomo Yanai, chief executive officer of Teva, the world’s largest generic company, reportedly made a recent trip to India. Robert J. Coury, chief of competitor Mylan, which acquired India’s Matrix Labs, is keen to do more shopping in India.

Certainly, India is not going to adopt the U.S. or European model in healthcare. But the country is in evolution and is going to develop its own healthcare system, these executives believe. And the companies wishing to operate in India must adapt to a system that is more habituated to generic culture and tends to be aloof from patented medicines.

Clearly, every pharma company thinks it is important to have a strong presence in India. What remains important for India is to continue to convey the message that it’s open for business.

S. Harachand is a pharmaceutical journalist based in Mumbai. He can be reached at [email protected].