Abbott Laboratories has agreed to buy the domestic healthcare business of India's Piramal Healthcare Ltd., a leading generics company, for $3.72 billion, the companies said Friday.
The deal reflects the growing global importance of generics as well as the rise of India's consumer market for drugs.
Illinois-based Abbott will pay $2.12 billion up front, plus $400 million annually for four years.
Abbott says the deal will vault it to number one in India's fast growing market for drugs, with 7 percent market share, and is part of the company's drive to expand in emerging markets and grow its generics portfolio.
Abbott expects pharma sales in India, which are on track to hit $8 billion this year, to more than double by 2015.
Piramal's healthcare business will become part of a new Abbott division created to boost sales outside the U.S. Together, the companies will have over 7,500 employees in India.
"Emerging markets represent one of the greatest opportunities in health care," Abbott chief executive Miles White said in a statement.
Abbott said it expects its Indian pharma business with Piramal to grow by 20 percent a year, with sales topping $2.5 billion by 2020.
Abbott said it plans to fund the Piramal acquisition with cash from its balance sheet and does not expect it to impact earnings guidance.
Emerging markets now account for over 20 percent of Abbott's business.
Last week, Abbott said it would license at least 24 products from India's Zydus Cadila to sell in emerging markets. The financial terms of the deal were not disclosed, but it includes an option to license 40 more products.
In February, Abbott agreed to pay $6.2 billion for Belgium's Solvay Pharmaceuticals, which has strong sales in Eastern Europe, Latin America, the Middle East and Asia.