J&J eyes JB Chem's Russian blockbuster

Global pharmaceutical company Johnson & Johnson (J&J) is in talks with JB Chemicals & Pharmaceuticals to buy its leading over-the-counter (OTC) brand, Doktor Mom, a range of cough and cold products.

Doktor Mom has annual sales of about Rs 200 crore in Russia and the Confederation of Independent States (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.

According to people in the know, the deal could be in the range of $200-250 million (Rs 900-1,100 crore). Russia and the CIS countries contribute about 45 per cent to JB Chemical’s revenue. The Mumbai-based company’s revenue was Rs 741 crore in 2009-10. The two companies have been in talks for three months, say sources.

In 2009-10, 60 per cent of JB Chemical’s revenue came from international markets, mainly Russia and the CIS countries.

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 subsidiary of JB Chemical.

“We do not want to comment on market speculation,” said a JB Chemical spokesperson.

Carol Goodrich, director, Corporate Media Relations, Johnson & Johnson, said, “As a matter of policy, we do not comment on rumors or speculation.”

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 because of the 28 per cent growth in Russia in ruble terms.

Analysts say global companies are nowadays keen to buy popular brands instead of companies.

“They don’t mind paying a high premium to grab the top position,” said an analyst.

Last year, US-based Abbott Labs became the top pharmaceutical company in India by buying the pharmaceutical unit of Piramal Healthcare for a valuation of $3.72 billion (Rs 17,500 crore). Piramal Healthcare’s revenue was Rs 3,760 crore last year.

In the Russian market, JB Chemicals 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.