The Hindu Business Line : Strides Arcolab buys Grandix for Rs 100 cr

Ringside view
Deal financed by debt and internal resources.
Marks Strides' plunge into national pharma scene.
Targets nationwide field sales strength of 400 from July.

Bangalore June 11 Strides Arcolab Ltd has announced its acquisition of Grandix Pharmaceuticals, Chennai, for Rs 100 crore. The move marks the Bangalore-based company's plunge into the national pharma scene.

"This allows us to ramp-up businesses and introduce our own products into the Indian market," Mr Arun Kumar, Vice-Chairman and Managing Director, told Business Line. "Grandix has an established distribution network and we are strong in products." The deal is financed by debt and internal resources, he said.

Recently, it bought an Italian fermentation facility for an undisclosed sum.

Strides Arcolab's scrip closed lower at Rs 326.95, after opening at Rs 336 and touching Rs 342.50 intra-day.

About its next domestic plans and further acquisitions, Mr Arun Kumar merely said: "India is a large expanded market. We were not interested in organic growth. If we cannot acquire companies, we will look at acquiring brands."

The immediate plan is to leverage existing products of Grandix with Strides' R&D pipeline. It will increase field sales strength nationwide to 400 from July.

Portfolios

Grandix, started in 1996, is a branded pharmaceutical company with operations mainly in the South. It made a 2006-07 turnover of Rs 48.50 crore and EBITDA of Rs 10.89 crore. Strides said the 2007 sales growth was expected to be over 30 per cent.

The Grandix portfolio of over 100 products includes anti-diabetics, anti-hypertensives and painkillers. Its flagship brand, ReNerve vitamin capsules, is worth over Rs 30 crore; it was the main attraction and a good fit for Strides which is the world's No. 5 soft gel maker, Mr Arun Kumar said.

Strides Arcolab, with 13 plants in India, Latin America, the US and Europe, manufactures generic anti-HIV drugs for export markets, as also anti-infectives, tuberculosis and malaria drugs. Its formulations are in various dosage forms, as soft and hard gelatin capsules, tablets, liquid injectibles and steriles. It closed 2006 with a group turnover of Rs 760 crore.

The 17-year-old specialty pharmaceuticals exporter turned homewards after firming up its Latin American presence in the past five years, followed by associations in Africa, Europe and the US. "Asia is our next growth sector and we are now focussing on it for the past two years."

The deal, valued by PricewaterhouseCoopers, is on a cash and debt-free basis and includes its subsidiary, Grandix Laboratories Ltd, a company release said. "This will be the company's springboard to national presence in one of the fastest-growing global markets. The transaction is accretive to Strides EPS and offers a platform to grow a domestic strategy by infusing a robust Strides pipeline."

More Stories on : Pharmaceuticals | Mergers & Acquisitions

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page