Torrent Set To Buy Unichem’s Domestic Ops For Rs 3,500 Crore

The deal-making would help the Sudhir Mehta-spearheaded Torrent to strengthen its footprint in the domestic market.

Mumbai/Ahmedabad: Torrent Pharmaceuticals is set to acquire the domestic formulations business of Unichem Laboratories in a deal estimated at about Rs 3,500 crore. A formal announcement on the slump sale of Unichem’s division to Torrent is expected in the next few days, or as early as on Friday, people directly aware of the matter said.
The deal-making would help the Sudhir Mehta-spearheaded Torrent to strengthen its footprint in the domestic market, especially in the cardiacneuro and gastro-intestinal segments where Unichem has a significant presence. Global giant Abbott and domestic rivals Lupin and Dr Reddy’shad evaluated buying the Unichem business before Torrent closed in.
The impending transaction is one of the significant consolidation moves in the domestic pharma industry after Sun Pharma’s acquisition of Ranbaxy from Japan’s Daiichi Sankyo for $3.2 billion in an all-stock deal in 2015. Torrent, which is ranked 15th in the local market, had purchased Elder Pharma’s India business for Rs 2,000 crore four years ago.
Market rumours about the sale of Unichem’s local business surfaced when investment bank MAPE Advisory started approaching potential suitors more than a year ago, though it was denied then. Unichem’s domestic operations reported a Rs 840-crore revenue last fiscal, and is projected to end the current fiscal at about Rs 925 crore. “The negotiations are almost complete pending some last-minute hagglings. We are hoping to make an announcement soon. The deal size will be in the range of Rs 3,200-3,500 crore,” said sources mentioned earlier in the report. About 2,500 sales representatives of Unichem are expected to move to Torrent as part of the deal.When contacted, a senior Torrent official declined to comment, while calls to Unichem were unanswered. Interestingly, both companies have their board meetings scheduled on November 3 to approve financial results for the quarter ended September 30.
The seven-decade-old, Prakash Mody-led Unichem will retain its international formulations business, which had a Rs 509-crore turnover last year. Unichem, in which the Mody family owns a 50.1% stake, has invested more than Rs 600 crore in two plants in Goa and Bhaddi (Himachal Pradesh) to boost its exports business in the next few years. Unichem undertakes contract manufacturing for Mylan and Pharmascience, among others.
Unichem’s biggest brand is cardiovascular drug Losar with Rs 200-crore sales followed by anti-infective Ampoxin with Rs 85 crore. Other significant brands are Telsar (Rs 60 crore), Unienzyme (Rs 60 crore) and Vizylac (Rs 40 crore). Unichem figures in the top-25 list of drug makers with a 0.87% share in the domestic market.
Torrent Pharma has an India business of around Rs 2,600 crore with 2.3% share. The Rs 5,800-crore company is growing at a strong double-digit, with a key presence in cardiac, cardio-vascular, gastro-intestinal, anti-diabetic and pain therapies. The company’s 13 brands like Shelcal, Chymoral, Nikola and Dilzem are among the top 500 in the market.

Torrent Set To Buy Unichem’s Domestic Ops For Rs 3,500 Crore 09-Nov-2017

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