MUMBAI -(Dow Jones)- Moving to fill a yawning gap in its emerging market strategy, German conglomerate Bayer AG (BAYN.XE) Friday said it formed a joint venture with India's Cadila Healthcare Ltd. (532321.BY) to sell health products there to an increasingly affluent middle class, focusing on women's health, metabolic disorders, heart disease, diabetes, cancer as well as diagnostic imaging devices.
Bayer's pharmaceuticals segment already occupies leading positions in China and Russia, but India has so far been a blank spot on its global map. So the joint venture, called Bayer Zydus Pharma, is a milestone for Bayer Healthcare as it moves to leverage its strong brand and product portfolio to take advantage of rapid growth in the Indian market.
Bayer has been trying for quite a while to expand its pharma activities into India, mainly by looking for suitable acquisitions there, but without success.
One problem is the country's lax patent law, which allows generic medicines to be marketed there even if the product remains under patent protection.
"From that point of view, it's quite sensible for Bayer to team up with a local partner who has more experience with that particular market," commented Karl-Heinz Scheunemann, an analyst with LBBW.
Joerg Reinhardt, Bayer HealthCare's CEO, Friday said "the formation of Bayer Zydus Pharma is a crucial element of the company's strategy to build a stronger presence in emerging markets."
"We expect to leverage the strengths of the joint venture, such as the optimized product portfolio and the distribution capabilities to enhance the launch of new products and the sales of existing brands," Reinhardt added.
The German chemicals and pharmaceuticals conglomerate had sales of about EUR400 million in the India in 2009, but 60% of that came from Bayer's crop protection unit CropScience.
Shortly after taking office in October, Bayer's Chief Executive Marjin Dekkers said the group would invest more money and more quickly in emerging markets.
One recent example of this is Bayer's plan to invest around EUR1 billion to double its polymer-production capacity in China over the next five years.
The company Friday said its newly formed joint venture in India should help its pharmaceutical business exceed the Subcontinent's market growth in the coming years.
Growth in India's pharmaceutical market is forecast at about 15% per year between 2009 and 2014, according to IMS Health.
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