Dr. Morepen Ltd. yesterday announced its third acquisition - Lemolate, a premium brand of Yash Pharma Laboratories Ltd. in the cough and cold category. The acquisition has been made at a total consideration of Rs. 10.95 crores. The company will market the brand under the umbrella of Dr. Morepen, similar to the other two recent acquisitions, Burnol and Lifespring.

Lemolate, the fifth largest brand in the Cough & cold category has registered a turnover of 9.60 crores in the year ending March 2002. As a part of its strategy, Dr. Morepen is focusing on developing a basket of specialty brands that would offer its customers a complete range of Self-Health products. Dr. Morepen already has a comprehensive gastro range, with Dab- Fizz, Dab Gel, Dab Tab, Isabgol and Gol Goli grabbing a significant market share. The powdered drink, C-sip, has also been very well received in the market.

With the acquisition of Lemolate, Morepen will enter the approximate Rs. 800 crores Cough and Cold segment, thus further expanding Dr. Morepen's FMHG portfolio. The product has enjoyed strong doctor endorsement since 1978, however currently 60 per cent of its sales comes through OTC. Lemolate can be sold as OTC in its current formulation.

Speaking on the acquisition, Sushil Suri, CMD, Morepen Laboratories Ltd., said, "As a strategy, we have decided to enter this category with one of the forerunners to expand the Dr. Morepen's basket of health products, therefore carrying its brand promise of 'Health in Your hands' further. The inherent strengths of the brand combined with our marketing strengths, will help us achieve high volumes and growth."

In line with the plans, the recent acquisitions have given a fillip to the topline of Dr.Morepen. Burnol brought in a turnover of Rs.6.20 crores and Lifespring further added Rs.7.54 crores. Now Lemolate will rake in another Rs.9.60 crores, consequently stimulating the growth of the company and facilitating its entry into newer markets. Morepen will also get access to the large distribution network of Lemolate that would complement the existing distribution and dealer network of the company. Ernst & Young were advisors to the sellers Yash Pharma Laboratories Ltd. and KPMG carried out the due diligence for Morepen Labs.

The brand has a very strong equity in the eastern and western parts of the country, which account for nearly 70 per cent of the sales. Lemolate is available in packs of ten tablets and is positioned as a "first-rate First Aid for Cold-n-flu syndrome". Lemolate contains Phenylephrine, which is not under DPCO and is much safer than PPA (Phenyl-Propanol-Amine). PPA is not a preferred drug worldwide.

Some of the strategic advantages that this acquisition will bring are: broaden the product portfolio of Dr. Morepen and provide strategic entry into the Rs.800 crore Cough and Cold segment. Rather than creating a totally new brand in a cluttered category of 112 brands, the advantages of acquiring an established brand greatly outweigh that of a start-up.

Another advantages is extension of the brand to North and South India where the company has a strong distribution network thereby increasing the market share considerably. It can also consolidate its position in the western and northern markets

An established brand like Lemolate provides tremendous opportunity for brand extension in the cough & cold segment.

Morepen Laboratories Limited (MLL) is one of the fastest growing Indian transnational in the country and has three high-tech plants in Himachal. MLL exports to over 50 countries, including the highly regulated markets of USA, Western Europe and Canada.