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

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

But Sun Pharma, Cipla, and Dr Reddy’s—which derive 30-45% of their revenue from selling mostly copycat or generic drugs to the US—are employing a more measured and slow approach even as they sit on large piles of cash. Torrent earns about 55% of its revenue from India and Mankind about 87%.

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

Total Indian pharma dealmaking this year till the end of September added up to about $2.6 billion across 28 deals. In all of 2024, mergers and acquisitions by Indian drugmakers totaled $4.1 billion across 29 deals.

When it comes to the US generic drugs market, companies have turned wary about investing to expand their capacity or acquire assets, said experts.

“Generic companies in India have created large manufacturing capacities. But, unfortunately, these capacities have not created value for them," said Vishal Manchanda, pharma analyst at Systematix Group, an investment advisory.

“What has happened over time is that US regulations have got stricter and stricter, which has translated into higher spending (capital and operational expenditure) towards upgrading the quality infrastructure and automation in manufacturing," he added. “While costs went up, generic drug pricing in the US chased new lows every year… Indian players incrementally have become selective in their capex spends."

Also, while US President Donald Trump’s recently announced import tariffs on pharmaceuticals exempt generic drugs and are unlikely to make a big dent on dealmaking in India, the new levy could lower valuations for non-US assets, Manchanda said.

“US generics is a commodity like business," added Prashant Nair, pharma research analyst at Ambit Capital.

Timelines for US drug regulatory approvals have shrunk from 4 years a decade ago to 12-18 months, allowing new players to enter but making the market prone to price erosion, he said.

“Companies (Indian drugmakers) have had bad experiences in the past with assets they bought at very high multiples, which did not play out well when the cycle turned downward. Stocks got penalized in terms of valuations as well. So that’s the reason why they are a lot more cautious now in this market," said Nair.

Horses for courses

Between 2021 and 2025, more than half the deals struck by domestic pharma companies have been India-focused, show data shared by Grant Thornton Bharat.

Some of these deals were aimed at gaining scale (the Torrent-JB Chemicals deal, for instance). Some others were struck to either gain access to key therapies (e.g. Eris Lifesciences Ltd acquired the India-branded formulation business of Biocon Biologics for ₹1,242 crore in March 2024) or technology (such as the Mankind-Bharat Serums deal).

“It’s a mix of small and larger size assets. It depends on what the objective is," said Ambit Capital’s Nair. “For example, in India, if there’s a big asset available, most companies would look at it because it’s a market that they understand very well. Plus, it’s a branded business, so [it would be] far more sustainable. This gives comfort to deploy more capital in such assets."

Meanwhile, companies like Sun Pharma, Cipla, and Dr Reddy’s, are employing a different approach. While they are looking to derisk their business and diversify away from the volatile US generic drugs market, they are waiting for the right assets to make large bets, according to industry experts.

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

In January, Dr Reddy’s said during a press briefing that it would focus on building a pipeline of complex drugs, such as weight-loss medications, and biosimilars, which are similar to and typically cheaper than an original biological drug that’s made from living organisms.

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

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

Sun Pharma, on the other hand, is looking to buy innovative assets from biotech firms as it seeks to transform into a global specialty pharma company, said industry experts. Earlier this year, it acquired US-based immuno-oncology company Checkpoint Therapeutics for $355 million (about ₹3,150 crore).

“The best novel drug ideas get curated in academic institutions, which biotechs take up for development and the global pharma innovators commercialize them. Sun Pharma is essentially following a similar model as a global innovator with focus on certain therapies (oncology and dermatology)," said Manchanda of Systematix Group.

Some drugmakers are striking deals to diversify into new segments.

For instance, Zydus, as part of increasing its focus on medtech, bought French medtech firm Amplitude Surgical earlier this year for €256.8 million (about ₹2,650 crore). And Cipla, which has a strong India business, has been chasing small-ticket acquisitions and licensing partnerships in consumer brands and key therapies.

“They [Cipla] don’t want to kill the cash they have with them," said Manchanda. “They are going slow. They are waiting for the right opportunities to come."

Correction: An earlier version incorrectly stated that Torrent and Mankind earned 51-55% of their business from India, and that Bharat Serums and Vaccines was headquartered in Bengaluru.