Generis buy should be good for Aurobindo Pharma: Surajit Pal, Prabhudas Liladher

In a chat with ET Now, Surajit Pal, Prabhudas Liladher, says the Generis buy will help them to reach their target to be number one in all the market in Europe where they are present.

Edited excerpts:


Is the acquisition of Portugal-based Generis for €135 million, value destructive or value creative for Aurobindo Pharma?

Of course it is not value destructive. It is a very good acquisition, smooth, niche without much of flutter. This will help them to reach their target to be number one in all the market in Europe where they are present. The second point is that it will also help them to further dig into the hospital segment.

These kind of companies will help them to increase their volume and without volume you cannot sustain in the European market. From that perspective, strategically it is a good acquisition, margin wise that could be increased to the company level only when they will be introducing their own injectibles in those markets. Otherwise it is fine, nothing great but nothing to ponder about either.

What about the valuations? At what level, has the deal been struck and more importantly do you think the balance sheet has that kind of strength to actually absorb this deal?

First of all, as far as acquisition is concerned, even if we assume the most pessimistic scenario and consider that they will be doing it through debt, remember, they reduced their debt in last two, three quarters by 150-170 million so in that place €135 million will come into picture.

If you track Granules, what did you make of the news that the Portuguese drug regulator has given 11 observations against it’s Gagillapur facility?

My problem with Granules is that I really cannot bet on a company which is betting highly on a highly commoditised product. That is where the risk is very high and I have only three, four or five kind of products I am highly exposed to that kind of risk. So I am never really comfortable with this kind of company.