If the deal falls in place, especially for its Losar brand of cardiovascular drugs will allow Torrent Pharma to expand its presence in the country.
Torrent Pharmaceuticals is in advanced talks to acquire the domestic formulations business of Unichem Laboratories Ltd for Rs 3,200-3,300 crore. The Ahmedabad based Pharma company has been looking to expand its presence in the Indian market and Unichem is currently holding a good portfolio, particularly the Losar brand of drugs in the cardiovascular space. The deal could be announced within a period of 10 days.
The market share of Losar brand of drugs which are used in the treatment of high blood pressure has improved by 4.8% in 2017 and has maintained the top rank as per information from Unichem. Sanjay Gupta, the executive director of Torrent Pharma had mentioned that the company continues to evaluate the acquisition opportunities in India. Mylan Laboratories and Abbott India were also in the race to buy Unichem’s domestic business but could have probably backed out due to expensive valuations. The revenue of Unichem from domestic formulations business stood at Rs.839.5 crore in 2016-17 which is higher by 11% from a year ago.
This deal is said to be valued at 16-17 times the earnings before interest, tax, and depreciation and amortization value of Unichem’s domestic business. This valuation is quite high but it could help Torrent to consolidate its position in the Indian pharma industry. In 2016-17, Torrent Pharma’s domestic revenue was Rs.1,977 crore which was higher by 8% from the previous year. Concerns caused due to the valuation have kept foreign buyers away from the pure generic drugs business in India, although there is interest in the injectable space.
The major inbound deals in pharma in 2016, Fosun Pharma’s majority stake buy in Gland Pharma and Baxter International’s acquisition of Claris Lifesciences Ltd injectable business were in companies holding a strong injectable portfolio. Until the end of September 2017, here have been a total of 27 mergers and acquisition deals in the pharmaceutical industry valued at $719 million which is much lower than the 54 deals, valued at $4.7 billion in 2016. Unichem is currently ranked 25th in the domestic market. The company’s operations were 57% of its sales in India and the chronic care business companies constitute 59% of its sales.
If the deal fructifies, it will bring about a significant change in the pharmaceutical industry and will provide a larger market share to Torrent Pharma in the country.