Aurobindo Looks to Buy Portuguese Drug Co


Hyderabad-based pharma co may spend $200 m on Generis, which has a presence across anti-infective, anti-diabetes & dermatology drugs

Hyderabad-based Aurobindo Pharma has expressed preliminary interest in acquiring Portuguese drug maker Generis Farmaceutica for about $200 million. Generis has a presence across anti-infective, respiratory, anti-diabetes and dermatology drugs and sells to hospitals, clinics and pharmacies besides having a contract manufacturing and analytical services arm.

Aurobindo's latest bid comes on the heels of an earlier shot at Israeli-drug maker Teva's UK product portfolio, where it was outbid by rival Intas Pharmaceuticals last month. The family-owned Ahmedabad company paid a whopping $764 million to bolster its European operations.

Aurobindo's move to buy the Portuguese firm is seen as resurrection of an earlier interest after its Teva chase was foiled.The Generis deal is on the table for the past few months, it fits Aurobindo's valu ation range and its ambitions in Europe.“But final outcome is not very clear,” an industry executive informed ET, adding some other drug makers are also in the contention. Generis generated sales of around $60 million last year. Aurobindo and Generis did not respond to questions from ET sent last week.

Aurobindo has been among Indian drug makers keen on acquisition-led growth of its international operations. Its global sales reached 13,896 crore in FY16, growing from 5,855 crore in FY13. In Europe, Aurobindo's sales 3,130 crore last year, an 88% shot to ` CAGR from ` 468 crore 2013.

The company wants to consolidate its presence among the top ten players in markets it is present in Europe. The top European countries for Aurobindo are France, Germany, Netherlands, Spain, UK, Portugal Italy and Romania.

At a recent investor presentation the company said lower generics penetration in Italy, Spain and France offer future growth as share of generics improve. It is also targeting extended presence in certain East European markets.

Although generics are beginning to show green shoots slowly in the European markets, a few within the Indian industry believe it to be a difficult market due to its scattered healthcare systems, a slow economic growth rate, near stagnating healthcare spends and limited scope to increase prices due to tender-based procurements in key markets. Besides securing manufacturing efficiencies remains a challenge.

Aurobindo has worked around those issues and fared better compared to most of its Indian peers. Two years ago, Aurobindo acquired the European business of the erstwhile Acatavis which incurred losses in the early phase. It has started showing signs of a turnaround in the last few quarters.

In recent times, Indian drug makers have turned aggressive bidders for international assets. Last month, it was reported that Sun and Lupin were among a handful of parties interested in buying the dermatology assets of German giant Bayer for a deal that may be priced at over $1 billion.

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