S African firm Adcock Ingram buys Cosme pharma

Adcock financial director Andy Hall conceded that his company had paid more than 13 times last year's profit of Cosme for the acquisition.

Hall said they were not dissuaded by the fact that there are more than 5,000 drug manufacturers in India.

"Cosme is not an unsubstantiated player in that market, ranked just outside the top 50 in a market where there are 5,000 drug companies. It certainly shows some of the brand equity they have built up over the past 40 years," he said.

Hall said they had not purchased the manufacturing component of Cosme, but only its sales and distribution infrastructure across 27 states in the Indian market.

 

"There is no question that we need to be diversifying our revenue in new streams and into high emerging growth markets and there are few better places to be doing that than India and certain parts of Africa," Hall said.

"We are fortunate to get with the business about one thousand medical reps who cover about 150,000 physicians in India, and on top of that about 60 brands which are very well entrenched in some fast-growing therapeutic classes areas such as dermatology and gynaecology," Hall said in an interview on the business show on Talk Radio 702.

He said the government's decision to roll out free generic medicines to the Indian population can certainly be a benefit to generic players and will bring a lot more players into the net in the public sector.

"Cosme is very much focused on the private sector, with a small institutional and export section, but if we can get our costing and economies of scale right, we should be able to supply the government with the generics that they will be looking for," he said.

Hall said Adcock would be involved in sales and distribution only, sourcing about a third of its products from Cosme and the rest from other contract manufacturers.

"We have got a manufacturing facility of our own in Bangalore which has been running very successfully now in a joint venture for about five years. We will probably see which of these products we could migrate into our own facility over time".

Hall said the Cosme deal was not at all like Adcock's failed attempt to take over Cipla in South Africa five years ago to bring cheaper Indian generic drugs to South Africa.

"It's not a dissimilar deal in terms of it being a branded generics business, but certainly the types of products that we will be marketing with Cosme in India are products which are generally available in South Africa in the generic space already," Hall said.

"But there is a potential that certain of the drugs that we make in our joint venture facility in Bangalore could be introduced in the Indian market over time subject to regulatory approval".