Hyderabad-headquartered Aurobindo Pharma on Monday, March 28th announced the acquisition of domestic formulation business of Veritaz Healthcare on a slump sale basis. According to a note issued by the company, “with this acquisition, Aurobindo marks its 1st step to set its footprint in the Indian Domestic Market.”
The transaction is for a consideration of Rs. 171 crore on debt-free cash-free basis. The transaction comes into effect from April 1, 2022 and expected to close by May 2022. This acquisition vehicle will greatly help Aurobindo as a launch pad for marketing biosimilar and other products in India.
Veritaz is an over 10 year old company with an audited turnover of Rs. 133 crore for the period of 9 months ended December ’21 and it had a turnover of Rs. 127 crore for the full year FY 21. Its current product portfolio, the company release says, “operates in an addressable market of Rs.26,775 crore which is an exciting space to gain market share and grow business. The company has around 40 brands across the acute and critical care segments. The total number of trademarks registered in its name is around 180. Its largest brands are Fepanil and Merogram group which clock a revenue of around Rs.31 crore and Rs.20 crore up to December 2021 respectively.”
Currently, the Aurobindo Pharma press release says, “the company caters to anti-infective and pain-management therapeutic areas and has a pipeline of products to enter into the Cardio/Diabetic and Ortho/Gynecology segments.
The company has an existing sales and distribution network with 900 field force, covering more 50k retailers with nearly 1700 stockiest, presence in 23 cities, reaching out to more than 70000 doctors and empaneled with major hospitals.”
The press release also quotes K. Nithyananda Reddy, Managing Director, Aurobindo Pharma as saying, “I am pleased to announce the Aurobindo’s entry into the domestic market with this acquisition; with this acquisition we strongly believe that with Aurobindo’s ability to build a product portfolio, and with the existing and expanding distribution network of Veritaz we will be able to create a significant footprint in the domestic pharma market over the next few years”.
In its filings to the bourses, Aurobindo Pharma clarifies that Veritaz is a 100 per cent subsidiary of Trident Chemphar Limited which is owned by RPR Enterprises represented by RPR Sons Advisors Private Limited and P. Suneela Rani jointly holding, the promoter group of the Company (Aurobindo Pharma) and therefore is in a sense a related party transaction. However, Aurobindo release says, “the acquisition of the business by the company is being done on arms-length price to supplement the company’s plans to enter into domestic formulations business.” Veritaz, it says, was formed on September 14, 2006 and so far promoters have invested more than Rs.800 million to build up the distribution infrastructure and brands.
