The Rs 3,866-crore pharma major Lupin Ltd will go in for overseas acquisitions within 6 to 9 months. Company source "Lupin is negotiating with a few companies in Gulf, Mexico, Brazil and Argentina, as it intends to increase its footprint in newer markets.
The acquisition would be of companies involved in pharma marketing or those who have a mix of marketing and manufacturing base."
The Mumbai-based company has been on a buying spree. It acquired a company, Kyowa, in Japan in 2007, followed by a Pharma Dynamics’ buy in South Africa in 2008 and the latest acquisition of Multicare Pharmaceutical in Philippines, earlier this year.
Lupin chairman Desh Bandhu Gupta hinted last year that the company was eyeing acquisitions in Middle East and Latin America to bolster its presence in this market. Now, the plan has taken a concrete shape, with recessionary sentiment waning in the overseas markets.
"Categorically, we are eyeing acquisitions in Mexico, Brazil, Argentina and the Gulf region. We expect the deal to conclude in around 6-9 months from now," a senior official told ET.
As per sources in know of the development, the company is currently in the due-diligence stage and is considering various targets. The cost of the acquisition will depend on the nature and size of the acquisition target.
According to Vinod Dhawan, president–AAMLA (Asia, Africa, Middle East and Latin America): "The company has never acquired for size, but has instead gone for a strategic fit." However, he declined to divulge further details.
Pharma industry sources believe, the $4.5-billion Gulf market will be an attractive bet for the company with Saudi Arabia comprising a major chunk. Branded generics being the norm in Gulf region, market dynamics are similar to that of India and give players such as Lupin an immediate competitive advantage. A source said Lupin was evaluating both the organic and inorganic routes to enter this market.
As of March 2008-09, Lupin’s AAMLA operations saw a turnover of Rs 586.1 crore. At $65 billion, the Japanese market is the second-largest pharma market in the world, growing at 1-2% this year. The generics segment in Japan is growing fastest at 12%.
The company’s Japanese subsidiary Kyowa contributed 12% to Lupin’s consolidated revenues that grew 23% in FY 08-09