Drugmaker Aurobindo Pharma Ltd said on Saturday that it has agreed to acquire Portugal-based pharmaceuticals products and supplier Generis Farmaceutica SA from private equity firm Magnum Capital Partners for €135 million (Rs 969 crore or $142 million) in an all cash deal.
Aurobindo Pharma will acquire Generis through its wholly-owned subsidiary Agile Pharma BV Netherlands, it said in a statement. The deal, which is subject to obtaining necessary approvals from the Portuguese authorities, is expected to be closed in February this year, it added.
The Indian company said the deal will help consolidate its footprint in Portugal, where its portfolio already consists of Aurovitas, Unipessoal LDA and Aurobindo Pharma-Portugal.
The newly acquired entity Generis, which has a manufacturing facility in Amadora, Portugal, is a generic pharmaceuticals firm that focuses on both the retail and hospital segments apart from exports, the statement said. It has a wide portfolio of products with a major share in therapeutic areas such as cardiovascular, central nervous system, anti-infective, and the genitourinary system, it added.
The Portuguese company, which was set up in 1982 had net sales of €64.8 million in 2016 and the estimated net sales this year is about €72 million. Its adjusted earnings before interest, taxes, depreciation and amortization or EBITDA is projected to improve to €15.8 million this year from €12.7 million last year.
“The acquisition of Generis, by leveraging its strong portfolio and unrivalled brand recognition, will allow us to establish ourselves as the top generics player in the Portuguese market,” said V Muralidharan, senior vice-president of European operations for Aurobindo, “The combined entity will benefit from a robust pipeline covering all major molecules coming off-patent in the next five years,” he added.
Aurobindo Pharma has been steadily expanding its European footprint since 2006, via acquisitions across several key markets, most notably in 2014 with the acquisition of Actavis’ commercial operations in seven west European countries, the company noted.
The Indian company, headquartered in Hyderabad, exports to over 150 countries across the globe with more than 87% of its revenues derived out of international operations, according to its annual report for 2015-16.
The drugmaker saw its consolidated revenues rise to Rs 13896.08 crore for the year ended 31 March 2016, having grown at 33.4% CAGR over the past three years.
Pharma companies eye inorganic expansion
Indian pharmaceutical companies have been stitching strategic deals in the past years, both in the domestic and overseas markets.
While China’s Fosun Pharmaceuticals (Group) Co. Ltd inked a big ticket deal last year to buy a majority stake in Hyderabad-based Gland Pharma Ltd for $1.26 billion from PE firm KKR and the company’s founders, there have been a spate of acquisitions by local drugmakers.
Most recently, in the second-biggest overseas acquisition by an Indian pharmaceuticals company ever, Temasek-backed Intas Pharmaceuticals Ltd inked a deal to buy assets and operations of Actavis Generics in the UK and Ireland from the world’s largest generic drugmaker Teva Pharmaceutical Industries Ltd year.
In 2015, in the biggest overseas acquisition by a pharma firm, Lupin Ltd, India’s third-largest drugmaker by sales, bought US-based pharmaceutical major GAVIS Pharmaceuticals LLC and Novel Laboratories Inc. (together known as GAVIS) for $880 million (Rs 5,610 crore).
The same year, Sun Pharma completed a big ticket domestic deal to acquire Ranbaxy Laboratories.
Other top local drugmakers like Cipla and others have also sewn large transactions.
Investors and analysts VCCircle spoke to recently said that strategic deals in the pharmaceuticals will continue as a trend this year as well.
“Companies that are third, fourth or fifth in one segment of the pharmaceuticals space aim to be number one or two. Therefore, they tend to sell assets that are not really non-core but assets where they are not market leaders, and use the cash from the sale to fortify their position where they are strong to be the top player. So we will see a lot of M&As happening,” said Tarun Khanna, partner at CX Partners, a sector-agnostic PE firm that also invests in healthcare.
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