Johnson & Johnson (J&J) will acquire over-the-counter Russian brands of Mumbai-based JB Chemicals & Pharmaceuticals (JBCPL) for about $260 million. The deal, expected to close by the middle of this year, is being struck through J&J’s wholly-owned Cilag GmbH International.
Bank of America and Merrill Lynch advised JBCPL on the deal.
In addition, the company’s board has also approved the sale of worldwide rights and registrations of three over-the-counter (OTC) brands — Doktor Mom, Rinza (the number one and two cough and cold brands in Russia) and Fitovit.
The Russia/Commonwealth of Independent States (CIS) OTC business is being sold as a going concern on a slump sale basis, including OTC trademarks, brands, patents, registrations and domain names. The sale will also involve the transfer of employees, inventory and receivables of the Russia/CIS OTC business.
Doktor Mom has annual sales of about Rs 200 crore in Russia and CIS countries (part of the erstwhile USSR). Russia dominates the OTC market in Central and Eastern European (CEE) countries with about 50 per cent market share
Commenting on the transaction, JBCPL Chairman J B Mody said: “The divestment will provide JBCPL with the financial flexibility to pursue new growth opportunities in India and other focus markets. We are confident that J&J will take our business in Russia/CIS to even greater heights.”
In Russia, JBCPL is among the top three Indian companies after Ranbaxy and Dr Reddy’s. Its flagship brands, Doktor Mom, Rinza and Metrogyl, account for about 90 per cent of its total sales in the region.
The Mumbai-based company’s revenue was Rs 741 crore in 2009-10, of which 69 per cent came from international markets. Out of this, Russia and the CIS countries accounted for 75 per cent to 80 per cent.
The Doktor Mom range, which includes a syrup, a rub and lozenges with flavours, is marketed in Russia and the CIS countries by Unique Pharmaceutical Laboratories, a JBCPL subsidiary.
According to a recent HDFC Securities report, the OTC market in CEE countries grew 8-9 per cent to €10 billion ($15 billion) in 2009. This was mainly due to the 28 per cent growth in Russia in rouble terms.
Russia is the world’s eighth-largest OTC market.
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