Pharma deals are surging. But the biggest drugmakers are holding back.

In July, Torrent Pharmaceuticals Ltd acquired 46.39% stake in Mumbai-based JB Chemicals and Pharmaceuticals Ltd. ₹11,917 crore. In October last year, Mankind Pharma Ltd acquired Bengaluru-based Bharat Serums and Vaccines Ltd. ₹13,768 crore.

However, Sun Pharma, Cipla and Dr., which derive 30-45% of their revenues mostly from selling imitation or generic drugs to the USA. Reddy’s is taking a more measured, slower approach even as it sits on huge piles of cash. Torrent and Mankind earn 51-55% of their business from India.

As of March, Sun Pharma’s net cash was approx. ₹It has ₹27,523 crore (about $3.1 billion) on its books. Cipla had ₹10,369 crore and that of Dr Reddy. ₹2,454 crore.

Total Indian pharma deals through end-September this year reached nearly $2.6 billion across 28 deals. The total of mergers and acquisitions of Indian pharmaceutical manufacturers in the whole of 2024 amounted to $4.1 billion in 29 deals.

When it comes to the U.S. generic drug market, companies are cautious about investing to expand capacity or acquire assets, experts said.

“Generic companies in India have created huge manufacturing capacities. But unfortunately these capacities have not created value for them,” said Vishal Manchanda, pharmaceutical analyst at Systematix Group, an investment consultancy.

“Over time, US regulations have become increasingly stringent, leading to higher expenditures (capital and operational expenditures) on improving quality infrastructure and automation in production,” he added. “As costs have risen, generic drug prices in the US have chased new lows every year… Indian players have become increasingly selective in their capex.”

Additionally, Manchanda said that US President Donald Trump’s recently announced import duties on drugs exempt generic drugs and are unlikely to deal a major blow to deals in India, but the new tax could reduce valuations of non-US assets.

“US generics are a business-like commodity,” added Prashant Nair, pharmaceutical research analyst at Ambit Capital.

He said timelines for US drug regulatory approvals have shortened to 12-18 months from 4 years a decade ago, allowing new players to enter but leaving the market prone to price erosion.

“Companies (Indian drug makers) have had bad experiences in the past with assets they have bought at very high multiples and that has not done well when the cycle has turned downwards. Equities have also been punished in terms of valuation. So that’s why they are much more cautious in this market now,” Nair said.

horses for courses

According to data shared by Grant Thornton Bharat, more than half of the deals made by domestic pharmaceutical companies between 2021 and 2025 were India-focused.

Some of these deals were aimed at gaining scale (e.g. the Torrent-JB Chemicals deal). Others have had the chance to gain access to key therapies (e.g. Eris Lifesciences Ltd acquired Biocon Biologics’ Indian branded formulation business). ₹1,242 crore in March 2024) or technology (like the Mankind-Bharat Serum deal).

“It’s a mix of small- and large-cap assets. It depends on what the target is,” Ambit Capital’s Nair said. “For example, if there is a large presence in India, most companies look at that because it’s a market they understand very well. Plus, it’s a branded business, so [it would be] much more sustainable. “This provides comfort in investing more capital in such assets.”

Meanwhile, companies like Sun Pharma, Cipla and Dr Reddy’s are taking a different approach. They are waiting for the right assets to make big bets as they look to hedge their bets and move away from the volatile U.S. generic drug market, industry experts say.

Sun Pharma, Dr Reddy’s and Cipla did not respond to Mint’s queries.

In January, Dr. Reddy will focus on building a pipeline of complex drugs, such as weight-loss drugs and biosimilars that are similar to and often cheaper than the original biologic drug made from living organisms, Reddy said at a news conference.

The Hyderabad-based drugmaker has signed several partnerships to strengthen its portfolio in essential treatments. It recently acquired anti-vertigo brand Stugeron from Belgium-based Janssen Pharmaceuticals for $50.5 million (approx. ₹450 crore) will expand its portfolio in emerging markets including India.

In September 2024, Dr Reddy acquired UK-based Haleon Plc.’s portfolio of global nicotine replacement therapy brands outside the US for £500 million (approx. ₹6,000 crore).

On the other hand, Sun Pharma, which aims to transform into a global specialty pharmaceutical company, is looking to acquire innovative assets from biotechnology firms, industry experts said. Earlier this year it acquired US-based immuno-oncology company Checkpoint Therapeutics for $355 million (approx. ₹3,150 crore).

“The best new drug ideas are curated at academic institutions, where biotech takes them up for development and global drug innovators commercialize them. Sun Pharma essentially follows a similar model as a global innovator focusing on specific treatments (oncology and dermatology),” said Systematix Group’s Manchanda.

Some drug manufacturers are making agreements to expand into new segments.

For example, as part of increasing its focus on medtech, Zydus acquired French medtech company Amplitude Surgical earlier this year for €256.8 million (approx. ₹2,650 crore). Cipla, which has a strong business in India, is pursuing small-ticket acquisitions and licensing partnerships in consumer brands and key therapies.

“Them [Cipla] I don’t want to kill the money they have with them,” Manchanda said. “They are going slowly. “They are waiting for the right opportunities to come along.”