Date:03/04/2006 URL: http://www.thehindubusinessline.com/2006/04/03/stories/2006040302400300.htm

Back Aurobindo Pharma eyeing more acquisitions

C.R. Sukumar

To spend $300 m for Europe, US forays

Hyderabad , April 2

Having recently acquired the UK-based Milpharm in an all-cash deal for an undisclosed consideration, Aurobindo Pharma Ltd (APL) is ready to spend up to $300 million to aggressively pursue acquisitions, mostly in Europe and to some extent in US.

Contrary to the strategy of domestic pharma industry majors such as Ranbaxy, Dr Reddy's and Matrix which went in for major acquisitions ranging above $250 million in the recent past, Aurobindo is looking at four-five acquisitions of smaller sizes of up to $50 million each in the European market to complement the substantial manufacturing infrastructure it had already created in India.

Robust infrastructure

"We spent around $400 million (Rs 1,800 crore) in the last 4-5 years on creating robust infrastructure for manufacturing, R&D and also regulatory filings machinery in several countries across the globe.

"Marketing infrastructure is the only segment that we need to strengthen. We began the process of actively scouting for overseas acquisitions," the Aurobindo Director, Mr Srinivas Lanka, told Business Line.

APIs, ANDAs

The Hyderabad-based generic pharmaceuticals and APIs manufacturer has a strong product portfolio spread over six major product areas encompassing antibiotics, anti-retro virals, CVS, CNS, gastroenterologicals and anti-allergics.

Three of its API facilities and three of the formulation units had obtained the USFDA approvals.

In the last 18-months period, the strong team of 600-plus scientists has enabled the company to successfully obtain 185 patents, file over 50 ANDAs and more than 50 DMFs in the US, apart from a number of dossiers in Europe, Canada, Australia, South Africa and other countries. The company could also obtain USFDA approvals for 23 of its ANDAs.

"We are planning to raise funds through issue of FCCBs for the proposed acquisitions. The issue size and the price will be finalised in a couple of days and the entire process of raising funds will be completed in the next fortnight or so," Mr Lanka said.

Change in revenue mix

The company is bullish on the opportunities to emerge from a number of patent expiries in the next three years. Following this, the company's revenue mix is expected to undergo drastic changes. From the existing mix of 47:53 for domestic and overseas revenues, the company expects it to reach 30:70 in the next couple of years.

"Except for segments like cancer, hormones and steroids, the company has presence in all the therapeutic segments where significant patent expiries are expected in the next three years. The company may also consider entering the second horizon segments such as cancer in the next phase," Mr Lanka said.