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Aurobindo Pharma may buy Portugal's Generis, deal likely to be valued at $200 million

Economic Times:  November, 2016

New Delhi:  Hyderabad-based Aurobindo Pharma has expressed preliminary interest in acquiring Portuguese drug maker Generis Farmaceutica for about $200 million.

Generis has presence across anti-infective, respiratory, anti-diabetes and dermatology drugs, besides a contract manufacturing and analytical services arm. It generated sales of around $60 million last year.

Aurobindo's latest bid comes on the heels of last month’s shot at Israeli drug maker Teva's UK product portfolio, where it was outbid by rival Intas Pharmaceuticals.

Aurobindo Pharma may buy Portugal's Generis, deal likely to be valued at $200 million

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 has been on the table for a few months now and it fits Aurobindo's valuation range and its ambitions in Europe. "But the final outcome is not very clear," an industry executive told ET, adding that some other drug makers were also in contention.

Aurobindo and Generis did not respond to ET's queries sent last week.

Aurobindo has been among Indian drug makers keen on acquisition-led growth of international operations. Its global sales reached `13,896 crore in FY16, from Rs 5,855 crore in FY13. In Europe, Aurobindo's sales shot to Rs 3,130 crore last year, an 88% CAGR from Rs 468 crore in 2013. The company wants to consolidate presence among the top 10 in Europe, where its target markets are France, Germany, the Netherlands, Spain, the UK, Portugal, Italy and Romania.


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

Although generics is beginning to show green shoots in European markets, a section of the Indian industry believes it will be a difficult market due to its scattered healthcare systems, a slow economic growth rate, near stagnating healthcare spend and limited scope to increase prices due to tender-based procurements in key markets. Besides, securing manufacturing efficiencies is a challenge.

Aurobindo has worked around those issues and fared better than most of its Indian peers. Two years ago, Aurobindo acquired the European business of the erstwhile Actavis, 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 $1billion.