Inorganic approach to growth relatively risky, but Cipla's recent acquisitions look good: Vinay Khattar

In a chat with ET Now, Vinay Khattar, senior vice-president and head of research at Edelweiss Financial Services, shares his view on Cipla.

ET Now: What is your take on Cipla? Is the company doing the right things by following such an aggressive inorganic route? First they acquired Medpro and now Hetero. They have also acquired a small dermatology company about two-three days ago?

Vinay Khattar: Inorganic approach (to growth) is relatively a high-risk approach. You either get access to technology or products, or you get access to clients. In case of pharmaceutical companies, a lot of times, it is the access to products. That said, at times, it is also the access to geographies and clients. Now, you could know only in hindsight whether the inorganic approach of acquiring a target and the kind of money that you are paying worked for you or not.

At this particular point in time, it looks a sane decision on part of Cipla management to go on for these acquisitions, but only time will tell whether the strategy actually works out in favour of the overall organisation and the valuations that the company has paid…