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“It is a different kind of acquisition from those we have done in the past,” says Sun Pharma Managing Director, Dilip Shanghvi, on the proposal to acquire speciality dermatology company DUSA.
The challenge is to create value, and we are confident and excited about the potential for growth in the dermatology market, he told analysts, a day after Sun announced its agreement to buy DUSA for $230 million.
A company official said Sun’s previous buys, including Caraco in the US and Israeli company Taro, were in the generic drugs space. In contrast, DUSA is an innovative drug device company, the official said.
Centrum Broking’s Senior Vice-President Ranjit Kapadia agrees the acquisition is different because it is more IP-related and there are more products in the research pipeline.
Growing pains
DUSA clocked revenues of $45 million in 2011, and the deal still has to go through the open offer process to shareholders, besides meeting other conditions, before it is completed.
Sun’s last overseas acquisition, Taro, saw the Mumbai-based company locked in a long, protracted battle across geographies. There will be no synergy (DUSA’s products) with Taro, Shanghvi clarified.
And while Sun made Caraco a wholly-owned subsidiary in 2011, it is at present undertaking efforts to do the same with Taro. But this process has not been without its hurdles, as minority shareholders are seeking higher prices for their shares.
Derma market
DUSA’s key product is Levulan, a light-sensitive combination therapy to treat a pre-cancerous skin condition, affecting the face and extremities. A frequently diagnosed skin condition in the US, Shanghvi said, there are about 5 million such treatments per year and the DUSA product has five per cent of the market. Along with drugs and other therapies by dermatologists, the segment is estimated at more than $1 billion, he added.
Meanwhile, the company also revised its guidance, pegging revenue growth at 30-32 per cent by March 2013. The confidence comes from performance seen in the first six months, a company official said. Sun’s earlier revenue guidance was about 20 per cent.
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