GlaxoSmithKline Pharmaceuticals [Get Quote], the Indian arm of global drug major GlaxoSmithKline, is scouting for acquisitions in the domestic market to consolidate its Indian business.

"We have a cash balance of close to Rs 1,500 crore (Rs 15 billion). A majority of this balance can be used for acquisitions as our annual working capital requirement is only Rs 25-30 crore (Rs 250-300 million). I will not rule out a buyout of companies to expand our domestic business," said Mernosh Kapadia, senior executive director, GSK [Get Quote] India.

It is speculated that GlaxoSmithKline Plc is in talks to acquire leading Indian drug major Piramal Healthcare, in a deal valued over $1.5 billion. Piramal Healthcare had denied the reports as 'market speculation.'

Kapadia said he would neither comment on the reports, nor on the parent company's plans. He also declined to reveal the names of companies GSK is in discussions for acquisition.

A dwindling pipeline of new products, increasing generic penetration and shrinking profits are forcing global drug players to look at acquiring Indian drug companies which produce drugs at one fourth of the cost in the west. Recently US based Merck & Co said the company was targeting major acquisitions of companies and brands in India.

The main focus in the domestic business will be to add an established portfolio of brands as opposed to adding new manufacturing facilities through acquisitions. GSK plans to achieve a growth of minimum 10 per cent per annum, through organic growth, he said.

The company is already the largest multinational drug player operating in the Indian market.

GSK India also plans to launch at least four new products from the parent stable in the coming quarters. The new launches will include Cervarix, GSK's much touted cervical cancer vaccine. The vaccine works by providing immunisation against the human papillomavirus. Another drug in the pipeline from the parent's stable will include a Streptococcus pneumonia vaccine, to be launched by 2010.

Currently, vaccines contribute about 8-10 per cent of GSK India's business in India.

During the last year, GSK launched its flagship patented cancer drug Tykerb in India and signed two in-licensing deals with leading Japanese companies Daiichi Sankyo for hypertension drug olmesartan and with Astellas for Micafungin, an anti-fungal drug. GSK also had launched two new vaccines in India for Diphtheria, Tetanus and acellular Pertussis (DTP), named Boostrix and Infanrix.