Dr Reddy's Laboratories, Nicholas Piramal [Get Quote] and other Indian drug makers are relying on niche and smaller value, acquisition strategy for growth owing to global slowdown and failure of big-ticket acquisitions in the past.

Underpinning the trend, Piramal Healthcare on Tuesday announced the acquisition of a US-based maker of anesthetic products company for $40 million.

"Currently many small technology driven pharma and biotech firms which lack adequate funds for growth are available for sale in the US and Europe. This is an opportunity for Indian companies," said Swati A Piramal, vice chairperson of Piramal Life Sciences and director, Piramal Healthcare.

In the recent past Piramal embarked upon three relatively small strategic buyouts. A few months ago, it bought two drug brands of Mumbai based Khandelwal Laboratories for Rs 116 crore (Rs 1.16 billion) and acquired Germany based PlasmaSelect's blood plasma products to become a global leader in polygeline-based blood plasma expansion products.

Early this year, Piramal also spent Rs 15 crore (Rs 150 million) to buy Bangalore-based Healthline to add a dedicated injectable drug manufacturing facility. Dr Reddy's this year announced two small strategic buyouts.

In the first week of April, Dr Reddy's acquired Jet Generici Sri of Italy to access a few products and a marketing set up in the Italian market and bought a portion of Dow Pharma's small molecules business in UK. The move to acquire niche smaller players comes as Dr Reddy's is still struggling to see benefits of the �480 million acquisition of Germany-based Betapharm.

"Availability of funds is an issue for companies that are looking at big ticket acquisitions. Besides, the risks involved in big acquisitions also make sense to look at buying out synergistic technologies and products," said Sarabjit Kaur Nagra, vice-president (research), Angel Broking.

Zydus Cadila, the fourth largest domestic drug maker, made three strategic small acquisitions this year, in the form of Laboratories Combix of Spain, Simayla Pharmaceuticals of South Africa and Dutch biopharma unit Etna Biotech for strong base in these markets and for new products.

Lupin, another leading drug maker, also did three small acquisitions this year to expand to new geographies. It bought Pharma Dynamics in South Africa, took a minority stake in Australian generic drug maker Generic Health and bought Hormosan Pharma of Germany, all small acquisitions, in comparison to its last year investment in Japan's Kyowa Pharmaceutical.

Industry observers also pointed out Plethico's investment in a CIS retail pharmacy chain, Actis Biologics' buyout of a few technologies of Cell Point, Marksans Pharma's [Get Quote] acquisition of UK based RelonChem and Hale as examples of strategic small investments by Indian companies to boost their business.