Despite rumours of Pfizer, Sanofi or GlaxoSmithKline buying the domestic drug-making business of India’s Piramal Healthcare, it is Abbott that has come up on the blind side and won the day with a $3.72 billion bid.

The US major is making an upfront payment of $2.12 billion, plus $400 million annually for the next four years, shooting Abbott to the number one slot in India, “one of the world's most attractive and rapidly growing markets,” said chief executive Miles White. He added that “our strong position in branded generics and growing presence in emerging markets is part of our ongoing diversified pharmaceutical strategy”.

The Indian market will generate nearly $8 billion in pharmaceutical annual sales this year, a number that is expected to more than double by 2015. Abbott estimates the growth of its Indian pharmaceutical business with Piramal to approach 20% annually, with expected sales of more than $2.5 billion by 2020. The Mumbai-headquartered group sells in India only and does not market traditional generics but its branded generics are expected to exceed $500 million next year.

Abbott noted Piramal has the largest field force in India with “a unique model that includes dedicated sales personnel in rural areas inhabited by 70% of the population”. Piramal's domestic drug-making business employs more than 5,000 people, while Abbott, which is celebrating its 100th year in India, has more than 2,500 employees across all of its businesses in the country.

It is no great surprise to see Abbott making this move, given that earlier this month it linked up with India’s Zydus Cadila to sell a number of products in emerging markets. It also set up a division designed to promote its established treatments in countries outside the USA.

The transaction is expected to close in the second half of this year and Abbott said it will not affect earnings guidance for 2010. Some observers have questioned the price-tag, which represents a premium of around 50% on the Piramal unit’s market value, but other analysts with Mr White who said on a conference call that “there is a scarcity of high-quality assets in this market and we believe Piramal is among the best”.

He added that “these markets are so significant in the future growth of our industry that it is important for us to be there early and in a meaningfully strong way.”