Industry Trend Analysis - Acquisition Will Bolster Aurobindo's Performance In Underdeveloped European Market - MAR 2017


BMI View: This acquisition will provide Aurobindo Pharma with another revenue stream in Europe, boosting its sales in what remains an underdeveloped region for the firm. As a market, Europe will still lag some way behind the US, Aurobindo's primary foreign market, and India, its largest market. However, the firm is building upon a strategy to improve its European sales through acquisitive growth; Generis Farmaceutica complements this strategy. European sales achieving parity with US sales will provide a strong foundation enabling Aurobindo to weather storms in either region.

Aurobindo Pharma has signed a binding agreement through which its subsidiary, Netherland-based Agile Pharma, will acquire Generis Farmaceutica from Magnum Capital Partners. The acquisition will consolidate Aurobindo's presence in Portugal, which currently consists of Aurovitas and Aurobindo Pharma (Portugal). Aurobindo claims that the consolidated business in the country will rank number one in the Portuguese generic pharmaceutical market and will have the largest generic product portfolio, consisting of 271 products.

Based in Portugal, Generis is engaged in the manufacture and sale of pharmaceutical products, and is currently ranked number two in the country. Closing of the transaction will be conditional upon obtaining the necessary approvals from the Portuguese authorities. The total consideration for the deal is EUR135mn (USD144.9mn). The acquisition includes a manufacturing facility in Amadora, Portugal, which has the capacity to manufacture 1.2bn tablets/capsules/sachets annually. Aurobindo estimates that the net sales for the acquired business will be around EUR72mn (USD77.3mn) in 2017, compared to EUR64.8mn (USD69.5mn) in 2016. Adjusted EBITDA for 2016 is estimated to be EUR12.7mn (USD13.6mn), which is projected to rise to EUR15.8mn (USD17.0mn) in 2017.

Room For Improvement In European Operations
Aurobindo's Sales By Market (INRmn)
Source: Aurobindo Pharma

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