Aurobindo Pharma buys Generis in a bid to boost margins in Europe

Aurobindo Pharma on Saturday announced the acquisition of Generis Farmacêutica, which operates in Portugal, from Magnum Capital Partners for an all-cash deal of 135 million euros (Rs 969.3 crore).

The deal will be completed through Aurobindo Pharma’s step-down subsidiary, Agile Pharma, Netherlands. It will include a manufacturing facility in Amadora, Portugal, which has the capacity to produce 1.2 billion tablets or capsules annually.aurobindo-pharma

The acquisition also consolidates Aurobindo’s footprint in Portugal. It portfolio currently consists of Aurovitas, Unipessoal LDA and Aurobindo Pharma-Portugal. Generis has a wide portfolio of products, with a major share in therapeutic areas such as cardiovascular, central nervous system, anti-infective, and the genitourinary system.

After the acquisition, the Aurobindo group will be the leader in the generic pharmaceutical market in Portugal. It will have the largest generic portfolio of 271 products.

Aurobindo expects to complete the deal by next month, after Portuguese Competition authorities clear the deal. It will not take any debt as part of this transaction.

Aurobindo’s Generis deal comes just months after its unsuccessful bid for Teva Pharmaceuticals’ assets in the UK and Ireland. But, these were bought out by rival Intas for $764 million (Rs 5,085 crore) in October last year.

This is a second major European acquisition by Aurobindo, which plans to grow its business on the continent — now the largest contributor to global pharmaceutical revenues after the US. With revenues of Rs 3,130 crore, the company’s European operations accounted for 22.5% of its consolidated topline (~13,896 crore) in the year 2015-16.

The management estimates that the net sales for the acquired business will be approximately 72 million euros (Rs 517 crore) in 2017, as compared to 64.8 million euros in the previous year. Adjusted Ebitda estimate for 2016 is 12.7 million euros, which is projected to improve to 15.8 million euros in 2017, according to a statement issued by Aurobindo.

Though it maintained a low profile all along, this Hyderabad-based company has worked at a feverish pitch with the largest number of new launches, both small and big, in the regulated markets by any Indian company in the past couple of years, while actively pursuing the inorganic route for a fast growth through which it had targeted to reach $3 billion revenue by the year FY18.

“Aurobindo has been steadily expanding its European footprint since 2006, via acquisitions across several key markets, most notably in 2014 with the acquisition of Actavis’s commercial operations in seven west European countries. The acquisition of Generis, thus, builds upon an already successful growth strategy,” Aurobindo maintained.

Commenting on the acquisition, V Muralidharan, senior vice-president of European operations for Aurobindo, said the acquisition, the company’s past acquisition activity underlined its commitment to focus on growth initiatives in European markets, and that would be a key driver of growth for the future.

“The acquisition of Generis, by leveraging its strong portfolio and unrivalled brand recognition, will allow us to establish ourselves as the top generics player in the Portuguese market. The combined entity will benefit from a robust pipeline covering all major molecules coming off-patent in the next five years,” he added.

Paulo Lilaia, chief executive officer, Generis, said: “Generis will benefit immensely from Aurobindo’s vertical integration and strong product pipeline. Our large portfolio, along with our unmatched commercial presence in Portugal, will allow Aurobindo to consolidate its market position.”


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