Pfizer-Allergan deal a non-event for India

In the global media, it is being described as the biggest takeover deal in pharma that is expected to be officially announced on Monday. The New York Times for instance says: "Pfizer has clinched a blockbuster merger with a fellow drug maker, one worth more than $150 billion, that can best be described in superlatives."

But some of the leading analysts and pharma company executives in India tell Business Today that the deal is largely a non-event for Indian pharma companies.

First, it is a deal between innovators, and Indian companies are in the generics drugs business. Pfizer has its presence in India and Allergan, even less, and is really known for its ophthalmology products. One of its popular products in India is 'Refresh Tears,' an eye-lubricant. Globally, Allergan is also known the "Botox maker".

Analysts say there would hardly be any overlapping of products between the companies. In fact, their portfolios are expected to be complementary. According to AIOCD AWACS ranking of pharma companies in the Indian retail market, Pfizer today stands at around 9th position and Allergan at around 48.

Analysts do not see the deal in any way directly increasing or reducing competition as Indian companies are not direct competitors. What could be expected in India is the joint entity could move Pfizer a couple of notches up in the Indian retail market pecking order.

Globally, though, the deal is expected to result in the creation of a huge speciality giant, especially with an edge in ophthalmology thanks to Allergan, and the combined entity is expected to be a formidable competition for most global innovator companies.

Increasingly, there are some clear messages from the global efforts at consolidation. One, the obvious gains in growth and girth and the resultant bargaining power in the market. Then, the US companies are looking to re-domicile outside the US for several reasons, one of which could be to lower the tax bill.

Analysts and media reports seem to suggest this as one of the reasons for this deal as Pfizer could move its headquarters from the US to Ireland. Mylan, another US major, has also shifted its domicile to the Netherlands.

The other message that seems to come across is perhaps an increasing focus on specialisation. Part of this was visible in the GSK-Novartis deal where they exchanged some of their portfolios and, in a sense, chose their battlefields.