Aurobindo Pharma scouting for suitable acquisitions in domestic market

Aurobindo Pha

Hyderabad-based Aurobindo Pharmaceuticals, which operates in the business-to-business (B2B) bulk drugs space in India, is scouting for acquisitions in the domestic market that would enable it to enter the branded generics segment here. Sources pointed out the company was looking for a potential acquisition in the range of Rs 30-40 billion, which would not only have a portfolio of pharma brands but also a strength of at least a few thousand medical representatives. An e-mail sent to Aurobindo remained unanswered. Sources said Aurobindo had been looking for buys in the Indian market for some time now, however, did not find a suitable match. “It has recently asked some investment bankers to look for a potential target that would be a fit for its requirements. It found some of the targets that it considered earlier (like Unichem) to be expensive. Aurobindo is essentially looking for a mid-sized firm with a turnover of Rs 7 billion or so,” said a source. Analysts said any company with a decent portfolio of brands and Rs 7-8 billion turnover would be seeking at least five-times the turnover in a deal. “Aurobindo is known to be value-conscious about its acquisitions and would only go for one that it finds suitable,” said a Mumbai-based analyst. He said Aurobindo’s strength lies in manufacturing and that is why it has been a leading generics player in the US market and is present in B2B sales (of bulk drugs) in India. The US contributed roughly 45 per cent of its turnover in FY18. According to the company’s quarterly results, its API business in the domestic market posted strong growth of 19.7 per cent to Rs 7.48 billion and contributed 17.6 per cent of the revenues during the first quarter of the current financial year.

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