Strides Arcolab to acquire Aspen's Australia assets

Acquisition, valued at Rs 1,900 crore, will help Strides rebuild its Australia business

Strides Arcolab on Thursday announced two of its subsidiaries  —Strides Pharma Global Pte Ltd (Singapore), and Strides (Australia) Pharma Pty Ltd — had signed definitive agreements with certain wholly-owned subsidiaries of Aspen Pharmacare Holdings Ltd to acquire their generic pharmaceutical business in Australia, along with certain branded pharmaceutical assets.

The acquisition is valued at A$380 million (Rs 1,900 crore).

The most notable merger and acquisition (M&A) deal in the pharmaceuticals segment in the recent past was the Dilip Shanghvi-controlled Sun Pharmaceutical Industries acquiring Ranbaxy from Japanese firm Daiichi Sankyo. The all-stock deal, signed in April last year, was estimated at $4 billion (including debt). Earlier, Sun had struck a deal with Israel’s Taro Pharmaceuticals for majority stake at $450 million. While Sun is looking at more M&As, recent reports have said Cipla is considering acquiring US-based pharma companies in the generics, respiratory and oncology segments.

The assets acquired by Strides recorded sales of about A$120 million (Rs 600 crore) in the past financial year, with an earnings before interest, tax, depreciation and amortisation margin of 31 per cent.

The acquisition will include access to the product pipeline being developed by Aspen. This includes a number of major product launches through the next six months.

The transactions will be financed by a combination of internal accruals and debt financing. These would be earnings per share-accretive immediately, Strides said in a filing to the BSE. The transactions were expected to be closed by the end of the second quarter of FY16, subject to customary closing conditions and regulatory approvals, the company said.

“The Australian generic pharmaceuticals market has always been very successful for Strides. Aspen’s Australian generic pharmaceutical assets are a valuable and unique platform for Strides to rebuild its business in that country,” said Arun Kumar, founder and group chief executive of Strides Arcolab. “Strong local management, a market-leading product portfolio, supported by our in-house cost-effective manufacturing, will be the key ingredients of our strategy for Australia.”

The business and assets being acquired from Aspen have a market share that will help rank Strides and its group entities as one of the top three generic pharmaceutical suppliers in Australia, as well as among the top 10 pharmaceutical companies in that market.

The business, to be under the Arrow Pharmaceuticals brand, will sell about 140 generic prescription drugs and an extensive range of non-prescription pharmacy products.

Strides’ previous business in the Australian generic pharmaceutical market, Ascent Pharmahealth Ltd, was sold to Actavis in January 2012, after a successful five-year investment and growth strategy. The Arrow Pharmaceuticals business will be led by Dennis Bastas, founder and former chief executive of Ascent Pharmahealth Ltd.