lpca Laboratories has entered into an agreement to pick up 33.38 per cent equity in Unichem Laboratories for ₹1,034.06 crore, with an eye on exporting to developed markets. 

The move will give the ₹5,399-crore Ipca an access to manufacturing facilities that supply products into the United States, said industry-watchers, as US regulatory action cast a shadow on some of Ipca’s facilities. It would also strengthen Ipca’s export-oriented finished drugs (formulations) business, they said, since Ipca has a strong presence in the Active Pharmaceutical Ingredients (API) segment.

For the ₹942-crore-Unichem, that had sold its branded business in India and Nepal to Torrent Pharma for ₹3,600 crore in 2017, the latest transaction will pave an exit for the promoters, especially in the absence of a succession plan, observed pharma industry-voices.

In its announcement on Monday, Ipca said it had signed a definitive Share Purchase Agreement (SPA) for the acquisition of 2,35,01,440 fully paid-up equity shares of ₹2 a piece, constituting 33.38 per cent of the paid-up equity share capital of Unichem Laboratories, from one of its promoter shareholders at ₹440 a piece.

Further, it added that it was making an open offer to the public equity· shareholders of Unichem to mop up upto 26 per cent of the fully diluted outstanding equity share capital at the same price. These transactions are subject to approvals including that of the Competition Commission of India, it said.

Both the companies were founded in the 1940s - Ipca (1949) and Unichem (1944). The business and product range of lpca and Unichem complement each others’ business and product range, Ipca said. 

“The common thread in Ipca’s past acquisitions has been that it bought manufacturing facilities (rather than brands) to gain access to markets,” said Vishal Manchanda, Senior Vice-President (Institutional Research) with Systematix Group. This time, too, he says, the rationale could be to acquire existing facilities that supply developed export markets, rather than set up one for that purpose, given the US regulatory issues faced by some of Ipca’s plants. 

Unichem has formulation manufacturing facilities at Goa, Ghaziabad (Uttar Pradesh) and Baddi (Himachal Pradesh).  Its API facilities are at Roha (Maharashtra), Pithampur (Madhya Pradesh) and Kolhapur (Maharashtra). ·

Premchand Godha, Ipca Promoter and Executive Chairman, said in a statement that Unichem had a proven quality track record with a differentiated capability which was complementary to lpca’s strengths, and would help grow in different markets. Dr Prakash A Mody, Unichem’s Promoter and Chairman and Managing Director, said the transaction would take Unichem through its next phase of growth.