Cadila Healthcare Ltd has signed an agreement to acquire 100 per cent stake in Quimica e Farmaceutica Nikkho do Brasil Ltda. (Nikkho), a mid-sized, privately held company in Brazil. The company is profit raking and had posted sales of US$ 26 mn for the Calendar Year 2006.
With the group already present in the pure generics market, this strategic acquisition brings in an added advantage of making a foray in the 'Branded generics' business in Brazil. The Brazilian pharma market is the largest of the Latin American markets estimated at $8 bn. The acquisition is being made through Zydus Healthcare Brasil Limitada, the step-down wholly-owned subsidiary of the company. An agreement signed will come into effect after the satisfaction of closing conditions.
Headquartered in Rio de Janeiro, Nikkho is a growing and profitable pharmaceutical company with a manufacturing facility. In existence for over four decades, the company caters exclusively to the Brazilian prescription drugs market.
With a strong marketing network, Nikkho's sales force of 125 people covers all the major markets in Brazil, and enjoys a good rapport with 60,000 medical practitioners. The company's product basket comprises therapies across a wide range of therapeutic segments such as general medicine, paediatrics, gynaecology, neurology, gastroenterology, otolarngology, respiratory, dermatology, and others.
The company's plant located at Rio De Janeiro has a total production capacity of 4.99 million ampoules/annually of both injectable and oral liquids and 96 million units/annually of solids (tablets). The company currently markets 22 products under 13 different brands. It also has nearly 50 registered brands, which are yet to be launched.
Elaborating on the reasons why Nikkho presents a high degree of fit, the chairman and managing director of the company, Pankaj R Patel said, "We have been looking at acquisitions that can add value to operations in our key, focused markets. The Brazilian market is reasonably large and is growing rapidly. With Nikkho, we gain a company with a heritage. It stands for high quality therapeutic products and has a strong equity with the doctors. This gives us an opportunity to build our presence further in a growth-driven environment. We now see ourselves adding value to our global expansion strategy by successfully penetrating the branded generics market in Brazil."
Nikkho's well entrenched presence will help the company in launching 'Branded specialty' products aggressively across Brazil. It will also enable the company to step up the registration process of several molecules. The foray in the branded generics segment is expected to fetch better margins and earnings.
The acquisition will also boost the company's existing generic business in Brazil by providing enhanced reach and distribution. The company which had set up its Brazilian subsidiary in 2002 has already registered 13 products which are being marketed as generics. Nikkho's ready manufacturing facility will benefit the company in the long term as the changing regulatory landscape in Brazil could make it mandatory for pharma companies to have a manufacturing base in the country. With the company already having its own QC lab in Brazil, the acquisition makes the company's operations a full fledged one.
With a turnover of more than Rs 1800 crore, the company has been expanding its global operations. On a path of accelerated growth, the group has been looking at long term revenue growth through both organic and inorganic route. Consolidating its operations, the group acquired Recon Healthcare in 2000, German Remedies Ltd., a listed MNC in 2001, Banyan Chemicals Ltd., a Company with an US FDA approved API plant in 2002, Alpharma France, the French affiliate of one of the world's largest generic Companies in 2003, Liva Healthcare a mid-sized derma player in India and Nippon Universal Pharmaceuticals Ltd of Japan, in 2007. The group employs over 6000 employees and has business operations in more than 50 countries worldwide.