Courtesy of Piramal Imaging

Piramal Healthcare became the latest Indian company to invest overseas, with an agreement Monday to buy a research and development portfolio from Bayer HealthCare Pharmaceuticals of Germany.

The deal, terms of which were not disclosed, brings Piramal Bayer’s molecular imaging business, including a facility in Berlin with 20 scientists and technicians, and a portfolio that includes florbetaben, a potential Alzheimer’s drug in final clinical trials.

The Indian economy continues to grow faster than those in the developed world, but that growth has slowed significantly – predictions are below 7 percent this year. Perhaps more importantly, a combination of red tape, lack of transparency, corruption, lack of opportunity and lack of credible projects have made it difficult to invest in the country, executives have said recently. Even as foreign firms like General Motors and Starbucks continue to look to India for growth, Indian companies with money to burn are heading overseas.

In 2010 and 2011, Indian companies did nearly 350 deals outside India, worth over $33 billion, according to Grant Thornton, a consulting firm. (In 2009, in contrast, they did just $1.4 billion in outbound deals.) “Indian acquirers continue to view outside markets as being strategic to their global growth plans,” said Harish H.V., a partner in the India team at Grant Thornton. The company predicts more deals in the pharmaceuticals, technology and real estate and infrastructure sectors in 2012.

After Piramal Healthcare sold its domestic formulation business to Abbott Laboratories for $3.7 billion in 2010, its chairman, Ajay Piramal, said he was struggling to find a way to invest the money in India. “Because people knew we had money, we had so many people approaching us for projects in the infrastructure sector,” he said. “These people had no experience and no knowledge and no track record of having built a business in any area. And yet they were coming to us saying we have licenses and approvals. That just didn’t sound right or smell right.”

Arko Datta/Reuters

So the company looked overseas, and snapped up the Canadian medical device company BioSyntech Inc for $3.9 million before doing Monday’s deal. The deals come as the Indian drug industry begins to take a more mainstream role in the global pharmaceutical market.

Others companies that have made significant overseas acquisitions recently include the Indian infrastructure giant GVK, which bought Australia’s Hancock Coal for $1.26 billion in September 2011; RPG Enterprises, part of the Adani Group, which acquired Australia’s Abbot Point Port Coal Terminal for $1.9 billion in June 2011; and The Aditya Birla Group, which acquired Columbian Chemicals Company, based in Atlanta, for $875 million in January 2011.

Apart from large conglomerates, small and medium-sized Indian companies are also looking outside the country for their investments, said Ashish Singh, chairman of consulting firm Bain India. Mr. Singh said that most investment inquiries look to East Africa and Southeast Asia, “largely due to frustrations emerging from the inability to get clearances, land acquisition for projects and rule reversals in some sectors.”

“We look overseas because it’s a question of ease of doing business,” the RPG Enterprises chairman, Harsh Goenka, said in December of 2011. “We are simply fed up of red tapism and the harassment involved,” in doing business in India, he said.

Hindalco, which deals in aluminium and copper, now gets over 30 percent of its business from Europe. Kumar Mangalam Birla, chairman of Hindalco, said in an interview with ET Now in December. “I think it’s a good time to start looking overseas,” he said.

Deepak Parekh, chairman of HDFC, says that reason Indian companies are looking to invest abroad is not just the rate of investment, but the much debated policy paralysis in the country. “Earlier, investing abroad seemed to be a risk diversification but the current impasse (in governance) makes it a necessity for companies to look elsewhere,” Mr. Parekh said.

What started as an unusual occurrence when Tata Tea acquired the global brand Tetley for $450 million in 2000, has become increasingly common. Indian companies announced 1,995 overseas acquisitions from 2000 until April of 2012, involving an investment of nearly $116 billion, according to Bloomberg.

Some have reaped rewards from these deals already. Last week, Mr. Pirmal said that BioSyntech had received European regulatory approval for their first patented product, BST-CarGel, a bio-orthopaedic product for cartilage repair. “We plan to build a promising portfolio in the pharma space, including our newly acquired Molecular Imaging assets, which will help us create a global branded pharma business,” Mr. Piramal said.

Piramal Healthcare did not disclose the financial details for Monday’s deal, which gives Piramal rights to the property, worldwide development, marketing and distribution rights of Bayer’s molecular imaging business. The Indian company will make the acquisition through a newly created subsidiary, Piramal Imaging SA. “The creation of Piramal Imaging allows us to pursue our mission to increase diagnostic accuracy of serious medical conditions for improved patient outcomes,” says Dr. Swati A. Piramal, a director of Piramal Healthcare.

Florbetaben is an imaging agent that could possibly facilitate the early detection of Alzheimer’s, allowing patients of the disease to receive specific treatment at an early stage.

“There are about 25 million patients of Alzheimer’s disease globally and it would grow to 100 million by 2020, hence the segment has a huge revenue potential and has lower competition,” Mr. Piramal said Monday. Florbetaban will compete with comparable Alzheimer’s imaging agents from global pharmaceutical companies like Eli Lilly, Pfizer and General Electric.

“This is in some ways a new beginning where an Indian company is going to launch a product in the global markets,” Mr. Piramal said. “I hope that this is the beginning of a new trend where Indian companies could also be on the global map.”