Bafna Pharma selling 74% stake in branded generics unit to Strides Arcolab for $8M

Chennai-based small size drugmaker Bafna Pharmaceuticals Limited has inked an agreement to sell majority stake in its India branded generics business to Strides Arcolab Limited for Rs 48.1 ($8 million) crore in cash, as per a stock market disclosure.

Bafna is engaged in sales and marketing of branded pharmaceuticals products in niche therapeutic segments of Haematinic, women healthcare, pediatric care in India and operates through the flagship brand ‘Raricap’ besides seven others.

Its business is present in 17 states in India with a field force of about 400 people and had revenue of Rs 24.6 crore for the year ended march 31, 2014.

Raricap is the eighth-largest oral Haematinic brand in India with eight SKUs generating Rs 20 crore in revenues. 

Bafna had acquired Raricap in 2011 from Johnson & Johnson; the brand has grown 64 per cent CAGR over the last three years.

As part of the transaction, Bafna will transfer its entire India branded generics business as a going concern on a slump sale basis to a special purpose vehicle where Strides Arcolab will hold 74 per cent. Bafna will continue to manufacture and supply the products from its existing manufacturing facilities for a period of five years and will hold the remaining 26 per cent in the JV.

The enterprise value of the business being acquired is pegged at Rs 65 crore.

Commenting on the transaction, Mahaveer Bafna, chairman and managing director, Bafna Pharmaceuticals, said, “This transaction helps Bafna de-leverage its balance-sheet and demonstrates our commitment to maximising value to our shareholders. Brand Raricap has legacy of over four decades and has significant growth potential.”

For Strides, the deal will enhance its product portfolio in the branded generics for women & child care segment. It would also draw strength from a wider distribution network for its own brand Renerve.

Arun Kumar, founder and group CEO, Strides Arcolab Ltd, said, “This acquisition provides necessary impetus to our domestic branded generics business and the traction is in line with our strategy to grow the company’s branded business. 

(Edited by Joby Puthuparampil Johnson)

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