Ranbaxy's thirst for European generics firms proves unquenchable
the week with three acquisitions of European generic companies
under its belt, hoping a strong foothold in Europe will help it
offset its declining fortunes in the US.
The company's sales in Europe last year increased 5 per cent at the same time when sales from the US, where it gets a quarter of its global revenue, dropped 22 per cent to $331m, so Ranbaxy is eager to follow on the footsteps of other Indian drug firms, who have spent spent $1.6bn on acquisitions in the past year, up from $265m a year ago, according to data compiled by Bloomberg.
The biggest deal of this kind to date is the acquisition of German firm Betapharm for $570m by Dr Reddy's in February, while Sun Pharma and Strides Arcolab also bought plants in Europe.
Offering $324m, Ranbaxy has now bought Terapia, Romania's largest drug company with annual sales of around $80m, along with its two manufacturing sites producing tablets, capsules, sterile ampoules and liquids.
Products manufactured from these plants will cater to the Romanian domestic market and will be used to service demand from other international markets where Ranbaxy has a presence, extending upon Ranbaxy's current manufacturing setup in Ireland, the company said.
Romania's pharmaceutical market is forecast to reach around $2.2bn in 2007, up from a level of around $945m in 2005, and Ranbaxy is looking to make Romania a hub for its European operations, launching 15 products in 2005.
"Within the Ranbaxy fold, Terapia unleashes multiple synergies of product development, product flow, low cost manufacturing, proximity and access to high growth markets, in country presence and sound fundamentals while being EPS accretive to the group immediately," said Ranbaxy CEO Malvinder Mohan Singh.
"The transaction is compelling and furthers us on our path to becoming a top five global generic company."
A day earlier, Ranbaxy acquired the unbranded generic business of Allen, a division of GlaxoSmithKline in Italy, which has 3,000 staff and two certified manufacturing plants.
Italy's generic market is one of the fastest growing markets in Europe, valued at approximately $420m, with an annual growth rate of 49 per cent.
Ranbaxy did not disclose financial details of the deal, which will come into force in April.
The week ended with Ranbaxy snapping up Belgium's Ethimed, a small yet valueable company that offers access to the country's branded, high priced market with increasing generic penetration.
Nascent markets like Romania and Italy, where genericisation is only between 10 to 20 per cent, offer great potential for growth for Ranbaxy, particularly as market conditions in the US toughen.
Because of the large size of the market and the higher valuations in the US compared to Europe, Indian pharma companies are finding it easier to go into merger synergies in Europe, since generic penetration has been going up due to favourable regulatory changes.
