Intas buys Teva assets for Rs 5,100 cr

Ahmedabad-based firm beats domestic rival Aurobindo, global giants Mylan and Novartis

In one of the largest overseas acquisitions by an India pharmaceutical company, Ahmedabad-based Intas Pharmaceuticals acquired the generics business of Actavis in the UK and Ireland from global generics giant Teva for an enterprise value of £600 million (Rs 5,100 crore) in an all-cash deal.

This is a big leap for the unlisted Indian company, which had annual revenue of Rs 6,569 crore, an earnings before interest, tax, depreciation and amortisation (Ebitda) margin of 22 per cent and net profit of Rs 882.5 crore in 2015-16.

Teva sold these assets after the European Commission's (EU) anti-trust divesture requirements arising from its acquisition of Actavis Generics.

The revenue of Teva's UK and Ireland stood at £250 million (Rs 2,100 crore) in 2015.

Intas paid 2.4 times Teva UK's revenue for the acquisition.

"This transaction represents a unique opportunity for Intas to build scale in the UK and in Ireland. It will add to our market-leading hospital franchise and create a strong platform for further European expansion," said Binish Chudgar, vice-chairman and managing director of Intas.

The family-owned company has private equity investment from Chrys Capital and Temasek, which own six per cent and 10 per cent, respectively, in Intas.

The company's debt-equity ratio was at 0.28 times in FY15.

Intas is among the top 10 Indian pharmaceutical companies by revenue, with focus on super-speciality in central nervous system, nephrology, gastroenterology, urology, orthopaedics and cardiology-diabetics segments. Sixty per cent of its revenue comes from exports to 70 countries, with four-fifth of this revenue coming from the US, the UK and the EU.

It is a major player in indigenously developed biosimilars (reverse-engineered biotech drugs) in the domestic market. Hospital supply and oral solid are the two other business divisions of the company. Last year, it had acquired the hospital supply business of Spain's Corporacion Combino Pharm for an undisclosed amount.

Through this acquisition, it obtained certain rights over Combino's hospital portfolio in a number of European and non-European countries. The acquisition of Teva's assets in the UK and Ireland will help the company leapfrog to its third business division of oral solids.

"Through our subsidiary, Accord Healthcare, we have been operating successfully in Europe for more than a decade and this acquisition will make Accord a leading generics player in the UK market. We have a clear plan for the continuation and development of the Barnstaple site and the Actavis UK and Ireland team; we look forward to welcoming them to the Intas Group. We are confident that the cultural alignment between Accord and Actavis UK & Ireland will ensure a smooth integration," said Chudgar.

According to investment banking sources, a bank consortium, which includes Mistubishi UFJ Financial Group, will provide bridge finance to Intas for the acquisition.

Moelis & Co was investment banking advisor to Intas for the deal.

The firm has been growing at a compounded annual growth rate of 20-25 per cent in the past decade and will maintain similar growth rates for the next four-five years, said Chudgar. This acquisition is now expected to provide an additional growth on top of the expected organic growth.

Intas beat domestic rival Aurobindo Pharma and global giants Mylan and Novartis for the bid.

Actavis UK and Ireland is one of the leading suppliers of generic pharmaceuticals in both the UK and Irish markets with selected assets and operations across the respective markets. The company focuses on providing generic products to both pharmacies and wholesalers in the UK & Ireland.

The company also has its manufacturing facility at Barnstaple in the UK.

"Together we have a great opportunity to build on the strong foundations of our respective organisations; we are excited to join the Intas/Accord family and look forward to an exciting future together," said Sara Vincent, senior vice-president, Actavis UK and Ireland.
INTAS: FY16 FINANCIALS

Revenue: 6,569; Ebitda: 1,477; Net profit: 882.5
(Rs crore)

BIG-TICKET FOREIGN ACQUISITIONS BY INDIAN PHARMAS

* 2006: Dr Reddy’s purchased German drugmaker Betapharm for 480 million euros (Rs 2,600 cr)

* 2015: Lupin buys US drugmaker Gavis for $880 m (Rs 5,600 cr)

* 2015: Cipla acquires InvaGen and Exelan for $550 mn (Rs 3,575 cr)

* 2016: Dr Reddy’s acquires 8 drugs from Teva Allergan for $350 mn (Rs 2,300 cr)

* 2016: Sun Pharma buys Novartis brands in Japan for $293 mn (Rs 1,900 cr)