Pharma cos hit the M&A trail yet again
Orchid Chemicals, Strides Arolab, Glenmark & Granules India, etc are on the prowl in Europe, US & Russia.
By Rajesh Unnikrishnan, TNN |
MUMBAI: Domestic pharmaceutical firms have hit the M&A street yet again, and mid-sized pharma firms like Orchid Chemicals, Strides Arolab, Glenmark Pharma, Granules India, Shasun Chemicals and Plethico Pharmaceuticals are on the prowl in Europe, US and Russia.
Most of them are in the final round of negotiations, and aim to consolidate their presence in the western markets, say industry officials and investment bankers. When M&A deals threaten to pour in, does the size matter? Not really.
The companies are looking for small-sized acquisitions abroad ranging between $10 million and $50 million. After Dr Reddy’s Lab acquisition of Betapharm in 2005, the Indian industry had taken a long break.
Pre-Betapharm acquisition, more than a dozen Indian drug manufacturers had either acquired companies, forged licence agreements or initiated alliances. The companies are back, with experience and deep pockets, and are striking fresh deals in the international market.
Analysts said the logic is simple — create a foothold in European markets, and make India a low-cost manufacturing base. Compared to India, the cost of manufacturing in the Europe and the US market is extremely high. “Last month, we raised $175 million through the FCCB route.
ADVERTISEMENT
Out of this, funds we have used to repay our debt, while the remaining funds will be used for acquisitions in the European market. Our merchant bankers are on the job. A deal will be concluded soon,” said Orchid Chemicals’ spokesperson. Plethico plans an acquisition of a minority stake in a CIS-based retail pharmacy chain company. “This acquisition will enable the company to de-basket its credit risks in CIS and help move from credit market (distribution) to a cash market segment (retail pharmacy),” Plethico sources said. The company has appointed Singhi Advisors as M&A advisors.
Granules India, which earlier forged JVs in Europe, is now scouting for acquisitions. Vaidyanathan Nateshan, chief marketing officer, Granules India, said the company is looking for opportunities in the Europe market. “We are in negotiations with some target companies. Nothing has been finalised so far,” he said. Vimal Kumar, whole-time director, Shasun, said the company has plans to acquire a research and development pharma firm in the US.
Merchant banking sources said after acquiring 90% equity in Medicamenta for $10 million recently, Glenmark is close to signing two similar deals in the Europe market.
ADVERTISEMENT
For Dr Reddy’s Lab, or for Aurobindo Pharma, which acquired Milpharm, and Matrix Laboratories, which bought Docpharma for $263 million in June 2005, the acquisition route has been to get a foothold and expand in the growing European markets. These companies already have a strong presence in the US market, which is the biggest, industry experts explained.Start a SIP with as low as ₹500 with ET Money App!
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
