Intas Pharmaceuticals to go for $4-billion deals in a month

Teva's units in Europe and Mallinckrodt's US generic business among the planned bids

Ahmedabad-based Intas Pharmaceuticals had emerged as the dark horse last October when it acquired the generic business of Actavis in the UK and Ireland for Rs 5,100 crore ($732 million) from Teva. 

Intas beat global giants Mylan and Novartis, besides domestic rival Aurobindo Pharma, to the deal.

In less than a year, Intas will be bidding for three assets worth $4 billion by mid-October. This would be the biggest bet by an Indian pharma overseas. Two of these three assets are Teva’s units in Europe. 

The world’s biggest generic maker is struggling with $40 billion debt following the acquisition of Allergan’s generic business last year. Teva reported $1 billion profit in the June quarter, down from $1.23 billion in the same quarter a year ago. “Intas has made a bid for Teva’s women’s health assets outside the US,” said a banker familiar with the development. The bid is estimated to be worth $800 million and buyout firm CVC Capital Partners and Spain’s closely held Chemo Group are also in the fray. Teva is in the final stage of discussions with the bidders and the result could be announced soon. An Intas Pharma spokesperson said: “These are market speculations and we would not like to comment on the same.”

Intas promoters Binish Chudgar and Nimish Chudgar are in London for the talks. Rothschild is advising Intas for the Teva deals.  

“In the coming weeks, Intas will also bid for Mallinckrodt’s US generic business valued at $2 billion and Teva’s oncology business in Europe valued at $1.2 billion,” said the banker. 

JPMorgan is advising Intas for the US bid, which is scheduled for later this month. The other Teva bid is scheduled for mid-October. 

“Intas is serious about acquiring all three assets. These are not only good assets but also debt is currently available cheap,” said a person familiar with Intas’ plans. 

Aurobindo Pharma also plans to bid for the two assets in the US and Europe, but Intas has an edge due to its familiarity in dealing with Teva. 

Intas’ net worth and debt for 2016-17 are not in the public domain, but it reported Rs 429-crore debt in 2015-16. In 2016-17, this could have risen to Rs 5,500 crore after the acquisition funded fully through debt.

Intas also reported a net worth of Rs 5,215 crore in 2015-16 and it generated Rs 1,031-crore profit after tax in 2016-17. Its net worth could, at best, be Rs 6,500 crore, an analyst said.

“Considering the company takes it debt up to two times it equity, it can raise Rs 7,500 crore for the acquisitions,” the analyst added. “Intas will require further equity if it has to acquire all three assets,” he pointed out.

At present, Intas is backed by private equity firms Temasek, ChrysCapital and Capital International, and the firm is mulling an initial public offer in case it wins all three bids.

BIG-TICKET FOREIGN BUYS BY INDIAN DRUG FIRMS

2006

• Dr Reddy’s purchases German drugmaker Betapharm for Rs 2,600 crore

2015

• Lupin buys US drugmaker Gavis for Rs 5,600 crore
• Cipla acquires InvaGen and Exelan for Rs 3,575 crore

2016

• Dr Reddy’s acquires 8 drugs from Teva Allergan for Rs 2,300 crore
• Sun Pharma buys Novartis brands in Japan for Rs 1,900 crore
• Intas buys Actavis assets in the UK and and Ireland for Rs 5,100 crore