Stada on Indian drug cos' radar

MUMBAI: German generic major, Stada Arzneimittel, has announced plans to sell its US business and a 50% stake in Swiss generics firm Helvepharm sparking off yet another race among Indian buyers for a prized overseas asset.

Leading domestic players could well have Stada’s US business on their radar given the size of the company. The four year old US operations is currently in the red.

For ‘05, Stada’s US business saw a decline in sales of 26% to $34m, and an operating loss of E10m, indicating that companies without a low cost manufacturing base are finding it difficult to weather the US market with its increasing generic competition and high-pricing pressures.

Among those that are still actively scouting around for targets in the international market and could be interested in Stada are pharma majors like Ranbaxy and Dr Reddy’s. In addition, companies like Wockhardt, Sun Pharma, Nicholas Piramal, Jubilant Organosys, Zydus Cadila & Torrent have also talked of their plans to buy overseas firms.

Many of the domestic companies have raised or are in the process of raising significant amounts of money to fund their inorganic growth strategies. Ranbaxy, for instance, has got its shareholders’ nod for an enabling resolution to raise up to $1.5bn through appropriate securities and it has already raised $440m through the foreign currency convertible bonds (FCCBs).

“Inorganic growth has been part of our stated strategy and we continue to look at opportunities in the US, Europe and India. However, we do not comment on market speculations,” a Ranbaxy official told ET.

Wockhardt, which had recently bid for a generic business in the US only to see the deal fall through, has also raised over $400m. The company has also received shareholders’ approval to raise up to $800m to fund overseas acquisitions through an issue of equity-related securities.

Sun Pharma, which had raised over $350m, has been scouting around for a target since ‘04. The company’s acquisition plans are still on the cards, sources told ET.

Nicholas Piramal, India too has received shareholders’ approval for raising $1 bn from the international or the domestic market through the issue of FCCBs or other securities. The funds will be deployed for an acquisition, the firm said.