Pharma major Strides Arcolab Ltd has confirmed that it is buying businesses of branded and generics drugs in Australia and Mauritius from South Africa's Aspen Pharmacare Holdings Ltd, paying $300 million (Rs 1908 crore) to expand its footprint in markets set for brisk growth.
Speaking to Business Today, Arun Kumar, Founder and Group CEO of Strides Arcolab said, "This is a market that we know very well and it is an opportunity to go back. We have put in place a leadership team and have a great portfolio of products."
For about Rs 1908 crore ($300 million), Strides is buying a generic drug operation in Australia that brought in sales of A$120 million in the year ended in June 2014, the firm said in a stock exchange filing on Thursday. The deal also covers the sale by Aspen's Mauritius unit of a portfolio of six branded prescription drugs to Strides' Singapore business.
In terms of timing, Arun Kumar told Business Today that the deal was strategic and that it would add around $120 million to Strides' revenues to "give us a run rate of around $760 million for the next financial year".
That is significant considering that Arun Kumar, who was ranked among the best CEOs in December last year by Business Today had sold Strides' injectibles business - Agila Specialties - to US pharma giant Mylan for a whopping $1.65 billion. This was more than three times Strides' revenue of around $500 million at the time.
Strides, a major manufacturer of soft gelatin capsules, said it will also gain access to Aspen's product pipeline that includes some "major product launches in the next six months".
Australia's pharmaceutical market is expected to grow to $32.1 billion by 2020 from $22.7 billion in 2013, according to market research firm Global Data, driven by rising health insurance cover and an increasing elderly population.
In its own statement, Aspen said the deals were in line with its existing strategy "to focus attention in areas where most value can be added". The moves are the latest in a series by Strides to streamline its portfio of assets. It bought Chennai, India-based drug ingredients maker Shasun Pharmaceuticals Ltd for $200 million last September, while in 2013 it sold its injectable drugs unit, Agila Specialties, to US firm Mylan NV for about $1.6 billion.
Strides owned Ascent Pharmahealth Ltd in Australia until 2012, when it sold the business to US firm Watson Pharmaceuticals Inc, now called Actavis plc. At the time, Strides said the deal was to sharpen its focus on high-margin, sterile injectable products. Strides said the Australian business will operate under the Arrrow Pharmaceuticals brand and will sell both prescription and non-prescription products, Strides said. The deals will be financed using internal reserves and debt, Strides said, and should be immediately accretive to its earnings per share.
The company said it expects the deals to close by the end of the second quarter.
($1 = 1.2674 Australian dollars)(Reporting by Zeba Siddiqui in Mumbai Editing by Sunil Nair and Kenneth Maxwell)