Ahmedabad-based Torrent Pharmaceuticals Ltd has said that it will acquire the India and Nepal businesses of Mumbai-based Unichem Laboratories Ltd for about ₹3,600 crore.

The deal is among the largest transactions in the domestic pharmaceutical landscape.

This is Torrent Pharma's second big-ticket acquisition in about four years, the last being its over ₹2,000-crore buy of Elder Pharma's India and Nepal businesses in December 2013.

In fact, in a recent interview with BusinessLine , Torrent Pharma Executive Chairman Samir Mehta had said he was keen on an ‘Elder Pharma type of acquisition’ in India, besides others in markets such as the US.

On Friday, following their respective board meetings, the two companies jointly said that Torrent was entering into a definitive binding agreement with Unichem that would also bring with it about 3,000 people supporting Unichem’s outgoing businesses and its Sikkim plant.

Fifth rank The deal is expected to close by the end of this calendar year. The acquisition puts Torrent in the fifth spot in the league of top firms in the Indian Pharma Market, according to IMS Health, a leading global information and technology services company.

The transaction is on a going concern basis by way of a slump sale, a company statement said, adding that Torrent will fund the acquisition through a mix of internal accruals and borrowings. In India, this is Torrent's fifth acquisition after acquiring select brands from Elder and Novartis, as well as manufacturing plants from Zyg Pharma and Glochem Industries, over the last four years.

Unichem's India business includes a portfolio of more than 120 brands in India and Nepal. Torrent will add a ₹200-crore brand along with three brands of more than ₹50 crore to its existing portfolio.

Notably, the Shelcal brand from the acquisition of Elder is now an over ₹300-crore brand and continues to grow. While the Elder acquisition is fully integrated now, the brands have clocked a CAGR of 23 per cent as against representative market growth of 11 per cent.

Brand wagon Torrent's total brand portfolio includes over 200 brands. Of this, 40 are market leaders in the respective segment. While three brands have a turnover of ₹100 crore, about seven brands have a revenue size between ₹50 crore and ₹100 crore.

The deal will open the doors for Torrent to enter into the OTC (over-the-counter) segment with the brand Unienzyme. Estimated to be a ₹50-crore brand, Unienzyme is a standalone brand having a limited presence in the country but without direct competition.

‘Strategic fit’ “The transaction is a strategic fit for Torrent and will strengthen its position in the key segments of cardiology, diabetology, gastro-intestinals and CNS therapies. It is also expected to realise cost and revenue synergies in Torrent's branded business in India,” Mehta said in a statement on the acquisition.

In a statement, Prakash Mody, Chairman of Unichem, said: “The deal will enable the organisation to deliver superior results in areas of innovative research, new chemical and biological entities and move into next the orbit of growth.”

The acquisition will provide a much-needed impetus to Torrent Pharma's cardiovascular therapeutic area besides adding a range of branded generic products from the Unichem stable.

Unichem will continue to have a greater focus on international business, comprising manufacturing, selling and marketing of fixed dosage formulation and APIs, and building a sustainable revenue stream by investing in R&D to develop its future product pipeline.

Losar brand Set up by industry veteran Amrut Mody, Unichem brings with it a domestic portfolio that includes the Losar brand range of cardiovascular drugs.

Notably, Torrent has exhibited its strength in cardiovascular (CV) and central nervous system (CNS) therapeutic areas.

For Torrent Pharma, according to Mehta, the chronic segment has already been in focus and more than two-thirds of the company’s revenues come from the chronic and sub-chronic space.

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