Eris Life extends rally post acquisition of Strides' India branded business

The stock rallied 11% to Rs 721, extending its 11% gain in past six trading sessions.

Eris Lifesciences moved higher by 11% to Rs 721, extending its 11% gain of the last six trading sessions after the company acquired the domestic formulations business of Strides Shasun in an Rs 500-crore deal, marking its foray into the fast-growing central nervous system (CNS) segment.

According to media report, Credit Suisse initiated coverage of Eris Lifesciences with a recommendation of outperform with price target of Rs 770 per share within a year.

Eris Lifesciences and Strides Shasun signed an agreement on Saturday, November 18, in which Eris Lifesciences will acquire 130 Strides Shasun brands in the neurology, nutraceuticals and gastrointestinal segments, along with employees who form part of the business.

Eris Lifesciences will acquire the marketing and distribution rights for the brands in India while Strides Shasun will retain the global rights for these drugs. The acquired drugs had sales of Rs 181 crore in 2016-17.

“The transaction is a good strategic fit for Eris and will strengthen our position in the key segments of CNS and gastrointestinal therapies. The market for CNS drugs in India is Rs 4,000-5,000 crore and it is growing at 10-15% a year,” said Amit Bakshi, managing director, Eris Lifesciences.

Eris Lifesciences accessed the equity market through an offer for sale in June 2017; the issue was priced at Rs 603 and oversubscribed by 3.27 times.

At 02:50 PM; the stock was trading 9.5% higher at Rs 711 on the BSE, as compared to 0.37% decline in the S&P BSE Sensex. A combined 1.09 million shares changed hands on the counter on the NSE and BSE so far.