Ranbaxy buys Terapia for $324 million

New Delhi, Mumbai, March 29 | Updated: Mar 30 2006, 05:45am hrs
In its second global acquisition in two days, Indias largest pharmaceutical company Ranbaxy Laboratories on Wednesday bought 96.7% stake in Romanias fifth largest pharma company Terapia from Boston-based private equity investors Advent International Corp for $324 million. Ranbaxy had bought Allen SpA-GlaxoSmithKline Plcs generic business in Italy-on Tuesday for an undisclosed amount.

FE had reported on March 14 that Ranbaxy and Lupin were the final shortlisted bidders for Terapia and that the deal would be closed by the end of March. Advent, which spent $44 million in a leveraged buyout to acquire Terapia in August, 2003, earned $280 million from the sale.

The Terapia acquisition, coupled with its own business in the country, makes Ranbaxy the largest generic drug manufacturer in Romania with revenues of around $100 million. This deal is the second largest acquisition in Indian pharma sector after Dr Reddys $570 million acquisition of Germanys betapharm Arzneimittel GmbH.

Analysts, however, consider the Ranbaxy-Terapia deal expensive. While the DRL buyout was valued at 2.92 times betapharms turnover, Ranbaxy has agreed to buy Terapia at 4.19 times its 2005 sales ($80 million). Says Shahina Mukadam, head of research, IDBI Capital Market, The price looks steep but is justified on EBITDA terms.

While Germanys over $25 billion pharma market is Europes biggest, Romanias $1.15 billion market is Europes fastest growing with 28% growth in 2005. Ranbaxy, however, sees Terapia as its window to the European markets. Ranbaxy stock closed 3.36% up at Rs 411.50 on the Bombay Stock Exchange.