The countdown to the sale of Ahmedabad-based Paras Pharma has begun, with at least four top multinational drug makers putting in their bids in the initial round. Interestingly, Indian fast moving consumer goods (FMCG) companies and pharma players have so far stayed out of the race.
People close to the development said on Monday was the day the initial bids were to be submitted and four global drug companies — the world’s second-largest, GlaxoSmithKline (GSK), the third-largest, Sanofi-Aventis, Swiss multinational Novartis, and US-based Johnson & Johnson — have actually put in their concrete bids for the over-the-counter (OTC) drug major.
They indicated the initial bids were much lower at around $600-$700 million, from the earlier expected valuation of close to $1 billion.
“While more serious players such as Japan’s Taisho Pharmaceuticals are expected to join the race, domestic FMCG majors like Emami and Dabur are unlikely to place a bid for the company,” said one of the sources.
Paras owns some of the fast moving healthcare OTC products in the domestic market such as Moov, DermiCool and Krack. The OTC portfolio of Paras had revenues of Rs 400 crore in 2009. Paras Pharma is likely to have over Rs 500 crore in top line and roughly Rs 120 crore in earnings before interest, tax, depreciation and amortisation (Ebitda) in 2010.
PE investors Actis Advisors and Sequoia Capital India Advisors jointly own 70 per cent in privately-held Paras Pharma and promoter Girish Patel and his family hold the rest. The existing PE investors were looking at nearly 30 times Ebitda numbers as enterprise valuation, said sources.
Spokespersons at Sanofi-Aventis and Novartis’ Indian operations said their companies would not comment on market speculations. GSK top executives did not answer calls. Business Standard could not reach Johnson & Johnson.
The drug market in India, which includes OTC products, is expected to grow at 15-20 per cent annually in the coming years. The Indian drug market is globally valued fourth in terms of volume and 13th in terms of value.