The Indian drug makers have made their fortunes largely on the magic of the generics, manufacturing out of patent medicines and selling them at a fraction of the price of the original drug. The generics business laid the foundation of the Indian pharma industry and today they export to over 100 countries around the world. Though many other countries have promoted their own generic manufacturing, but so far the Indians did not have a serious global contender. But now, things are about to change as several Western drug makers like Pfizer and GlaxoSmithkline are planning large-scale forays into generic manufacturing. This could threaten the growth prospects and survival of Indian generic companies such as Ranbaxy Laboratories, Dr Reddy’s Laboratories and Sun Pharma. Pfizer, the world’s largest drug company, which recently tied-up with Hyderabad-based Aurobindo Pharma to market off-patent drugs in the US and Europe, is planning to develop its own new generics, licensing deals and buy-out of generic companies. The company already has a small generic arm, Greenstone, to market its own off-patent drugs. Glaxo Smithkline, the world’s second largest drug company, is eyeing a stake in South Africa’s largest drug firm, Aspen Pharmacare, and is speculated to acquire Piramal Healthcare. French drug giant Sanofi-Aventis, also in the race for Piramal Healthcare according to reports, has acquired the Czech generic drug maker, Zentiva, for $2 billion. India’s largest drug maker, Ranbaxy, was acquired last year by Japan’s Daiichi Sankyo. Novartis already owns Sandoz, the second largest generic drug company after Israel-based Teva Pharmaceuticals. “Multinational drug makers realise that future growth prospects are in emerging markets, where generics dominate. While developed markets like the US and Europe are stagnating with 1-2 per cent growth, emerging markets are growing at 12-14 per cent annually,” says D G Shah, secretary-general of the Indian Pharmaceutical Alliance (IPA) and former chairman of the International Generic Pharmaceutical Alliance (IGPA). Germany-based Merck KGaA, the oldest multinational pharmaceutical company, is targeting to acquire a prominent Indian pharma company and established drug brands, as part of its target to earn over Rs32 billion from its Indian operations within the next four years. The global generics market will grow to $140-150 bn by 2015, thanks to $105 bn worth of drugs going off-patent in the near future, according to a report by YES Bank.