The Hindu Business Line : Zydus Cadila buys Brazil's Nikkho for $26 m

Ahmedabad June 25 The Ahmedabad-based pharma major Cadila Healthcare Ltd (Zydus Cadila) today announced its second overseas acquisition for this year, signing an agreement to acquire 100 per cent stake in a Brazilian company, Quimica e Farmaceutica Nikkho do Brasil Ltda (Nikkho).

The mid-sized, privately held Nikkho posted sales of $26 million for the calendar year 2006. The consideration paid represents sales multiple of around 1, that is, nearly $26 million, a Zydus spokesperson told Business Line here.

In April this year, Zydus Cadila had acquired Japan's Nippon Universal Pharmaceuticals Ltd.

With the Group already present in the pure generics market, the strategic Brazilian acquisition brings in an added advantage of making a foray in the `branded generics' business in Brazil. The Brazilian pharma market is the largest of the Latin American markets estimated at $8 billion. The acquisition is being made through Zydus Healthcare Brasil Limitada, the step-down wholly owned subsidiary of Cadila Healthcare Ltd.

An agreement signed today will come into effect after the satisfaction of closing conditions. Headquartered in Rio de Janeiro, Nikkho is a growing and profitable pharmaceutical company with a manufacturing facility. In existence for over four decades, the company caters exclusively to the Brazilian prescription drugs market.

Product basket

The company's product basket comprises therapies across a wide range of therapeutic segments such as general medicine, paediatrics, gynaecology, neurology, gastroenterology, otolaryngology, respiratory, dermatology, and others.

The company's plant located at Rio De Janeiro has a total production capacity of 4.99 million ampoules annually of both injectable and oral liquids and 96 million units annually of solids (tablets). The company currently markets 22 products under 13 different brands. It also has nearly 50 registered brands, which are yet to be launched.

Elaborating on the reasons why Nikkho presents a high degree of fit, the Chairman and Managing Director of Zydus Cadila, Mr Pankaj R. Patel, said the Brazilian market is reasonably large and is growing rapidly. With Nikkho, we gain a company with a heritage. Nikkho's presence will help Zydus Cadila in launching `branded specialty' products aggressively across Brazil and enable it to step up the registration process of several molecules. The foray in the branded generics segment is expected to fetch better margins and earnings.