Aurobindo Pharma Ltd has signed a pact to acquire the commercial operations and certain supporting infrastructure of Canadian pharmaceutical firm Apotex International Inc. in five European countries for €74 million ($86.5 million).
The acquisition is in line with Aurobindo’s strategy to strengthen its European business and to expand in Eastern Europe’s generics drug market, the Indian drugmaker said in a stock-exchange filing. It will make the purchase via a wholly owned step-down Dutch unit.
The five countries are Poland, the Czech Republic, the Netherlands, Spain and Belgium.
The acquisition will help Aurobindo diversify its European product portfolio by adding over 200 generics and more than 80 over-the-counter (OTC) products that had total sales of €133 million in the year ended March 2018.
“Although some of these businesses are currently loss-making, the company expects them to return to profitability when combined with the company’s vertically integrated platform and existing commercial infrastructure,” Aurobindo said.
The acquisition will make Aurobindo one of the top 15 generic drug companies in Poland and the Czech Republic, a leading OTC company by volume in the Netherlands, and among the top five brands in retail generics market in Belgium, the company said.
Aurobindo said closing of the transaction is conditional on the receipt of competition clearances for the transaction by the Dutch and Polish authorities and the deal is likely to be completed in three to six months’ time. Aurobindo and Apotex will enter into a transitional manufacturing and supply arrangement to support the ongoing growth plans of these businesses.
Jefferies International Ltd was the sole financial adviser and Herbert Smith Freehills LLP acted as legal counsel to Aurobindo. Ernst & Young (EY) India provided financial due diligence services.
Aurobindo’s acquisition-led growth in Europe
Hyderabad-based Aurobindo, a maker of generic drugs and active pharmaceutical ingredients, has been expanding in Europe since 2006, largely through acquisitions in recent years in several key markets.
In 2014, it acquired Actavis’s commercial operations in seven Western European countries for €30 million. In 2017, it bought Generis Farmaceutica in Portugal from private equity firm Magnum Capital Partners for €135 million. Last year, it bought four biosimilar products from Swiss firm TL Biopharmaceutical AG.
For the fiscal year ended March 2018, Aurobindo had sales of €577 million from its European businesses.
It currently has a presence in nine European countries--Portugal, France, Germany, the Netherlands, Spain, Italy, Belgium, the UK and Romania. The US and Europe are Aurobindo’s two largest markets accounting for over 70% of the company’s total sales of $2.6 billion.
Prominent pharma M&As
Aurobindo has likely submitted a non-binding bid to buy global healthcare giant Novartis AG’s dermatology generics drug business for about $1.6 billion after it walked away from the race to purchase the generics business of UK-based Mallinckrodt Plc last year.
The record for sealing the biggest overseas acquisition by an Indian pharmaceutical company goes to Lupin Ltd, which acquired US-based pharmaceutical major GAVIS Pharmaceuticals LLC and Novel Laboratories Inc. in 2015 for $880 million (Rs 5,610 crore then). The same year, Sun Pharmaceutical Industries Ltd completed a big-ticket domestic deal to acquire domestic rival Ranbaxy Laboratories.
Intas struck the second-biggest overseas deal by an Indian drugmaker when it acquired the assets and operations of Actavis Generics in the UK and Ireland in 2016 from Teva for $769 million.