Ahmedabad-headquartered Rs 58 billion worth drug firm Torrent Pharmaceuticals on Thursday made its sixth acquisition in the last five years to put its fledgeling US business on a recovery path - it bought a generic pharmaceutical and over the counter (OTC) drugs company Bio-Pharm Inc (BPI) for an undisclosed amount. Market sources peg the deal size at around a few billion rupees and much lesser than Torrent's latest buy Unichem (a Rs 36 billion deal). The Levittown, Pennsylvania-based company operates in the sector of oral solutions, suspensions and suppositories and has ten approved abbreviated new drug applications (ANDAs) and another 10 ANDAs under review at the US Food and Drug Administration (USFDA) for itself. Its partners have an additional 17 products under development. The move is expected to fast track Torrent's product launches in the US and it does not have a robust ANDA pipeline for that geography at the moment. Moreover, through this acquisition, the company also got a 75,000 square feet USFDA registered facility that can manufacture controlled substances. This is significant as controlled substances (any drug or chemical whose manufacture, possession or use is regulated by the government. These are usually substances that can lead to moderate or low physical dependence and high psychological dependence) can be manufactured in the US only as per the government's guidelines (DEA Schedule II-V). Torrent thus gains entry into a limited competition portfolio, which is shot in the arm as the company does not have any big molecule in its US pipeline at the moment. Further, BPI Inc being an R&D driven company, Torrent plans to further invest to expand the BPI facilities including R&D and increase the number of product filings from this new asset. . Torrent's US business (which had seen a 220 per cent surge in FY16 thanks to the launch of psychotropic drug Aripiprazole), has seen tough times since.
FY17 saw its Ebitda slipping to 27 per cent compared to 44 per cent in the previous year (down 17 per cent) thanks to a slowing down US business. In the first half of the current financial year, the US business shrank 30 per cent to Rs 5.2 billion while its domestic business recorded a revenue growth of 6 per cent. The poor performance in the US has dragged Torrent's overall revenues down by 6 per cent year on year in H1FY18, and PAT by 21 per cent.UBS Research analyst Hemant Bakhru felt that considering limited abbreviated new drug application (ANDA) pipeline of Torrent Pharma, the US growth in FY18 would remain subdued. Torrent re-filed Renvela and Renagel in Q4FY17. Around 8-10 ANDA launches are expected during the fiscal, but only a few of these launches are meaningful ($5-20 million size of the molecules). UBS said that the management has guided for over 15 per cent price erosion on US-based business. The company was quick to realise tha it would take time to boost the US pipeline - it thus chose to fast-track the US growth through the irorganic route, besides shoring up its domestic formulations business. Thanks to the recent acquisition of Unichem's branded business, analysts expect that in FY19 and FY20, more than 60 per cent of the Ebitda would be derived from the domestic formulations business.