Eris Lifesciences Ltd has agreed to acquire Strides Shasun Ltd’s branded generics business in India for Rs 500 crore ($77 million) in cash, the two companies said on Saturday.
Strides’ India branded generics business comprises a portfolio of more than 130 brands in the domains of neurology, psychiatry and nutraceuticals. This business had sales of Rs 181 crore in 2016-17.
As part of the agreement, Eris will acquire the marketing and distribution rights for the portfolio of products in India while Strides will retain the global rights for these products.
This acquisition is Eris’s fourth—and the largest—in the past 18 months, and will help it break into the league of top 25 companies in the Indian pharmaceutical sector with a market share of more than 1%.
Eris will also be among the top 10 companies in the Central Nervous System (CNS) segment. The company said it had forayed into the CNS segment only recently.
Eris said it is already among the top 20 companies in the cardiology segment and among the top 10 in the diabetology segment. The company said that it has focused on the two chronic segments since inception in 2007. The acquisition cements Eris’s position in the top three chronic segments, it said.
Shashank Sinha, managing director at Strides, said the company will use the net proceeds from this transaction to pay debt of Rs 400 crore.
“This transaction is the outcome of our portfolio reprioritization, to focus more sharply on larger regulated markets. We retain global rights for the divested portfolio, which have significant sales in Africa and will continue to grow our emerging market business,” Sinha said.
Eris MD Amit Bakshi said that the transaction is a “good strategic fit” for the company and that it expects to realise cost and revenue synergies given its strong presence in the branded business in India.
The drugmaker had made its stock market debut in June after an initial public offering where its founders and other shareholders, including ChrysCapital, had sold shares. The PE firm sold its entire 16.25% stake through the IPO.
Eris has struck three acquisitions over the past year and half. In August 2016, the company signed a pact with Amay Pharmacuticals Pvt. Ltd to acquire trademarks of 40 brands for Rs 32.87 crore and a non-compete fee of Rs 5 crore to strengthen its cardiovascular and anti-diabetics therapeutic segments.
In December 2016, Eris had increased its stake in Kinedex Healthcare Pvt. Ltd from 61.48% to 75.48%. Last month, Eris acquired nutraceuticals maker UTH Healthcare Ltd for Rs 12.85 crore.
The Strides-Eris transaction is subject to customary closing conditions and is likely to close by the end of this month.
For Strides, MAPE Advisory Group and Tatva Legal acted as the transaction adviser and legal adviser, respectively. EY India was the exclusive M&A adviser and Shardul Amarchand Mangaldas & Co was the legal adviser to Eris Lifesciences on this transaction.