Strides Arcolab back in Australia with new deal

{mosimage}Indian pharma major Strides Arcolab returns to Australia after three years. It announced today that it is to acquire a generic pharmaceutical business and related assets from Aspen for approximately A$380 million. Speaking to Business Today, Arun Kumar, Founder and Group CEO of Strides Arcolab said, "This is a market that we know very well and it is an opportunity to go back (to Australia). We have put in place a leadership team and have a great portfolio of products."

A little over three years ago, Strides Arcolab made news by selling its 94 per cent stake in Ascent Pharmahealth, its subsidiary with operations in Australia and Southeast Asia, to Watson Pharmaceuticals (now Actavis Inc) for $393 million.

As per today's announcement by Strides Arcolab, Strides Pharma Global Pte. Ltd, Singapore and Strides (Australia) Pharma Pty Ltd, Australia, both wholly owned subsidiaries of Strides Arcolab, have signed definitive agreements with certain wholly owned subsidiaries of Aspen Pharmacare Holdings Limited, a company listed on the Johannesburg Stock Exchange (Aspen), to acquire a generic pharmaceutical business in Australia together with certain branded pharmaceutical assets.

The business and assets being acquired from Aspen, according to a note issued by Strides Arcolab, have a current prescription market share that will rank Strides and its group entities as one of the top three generic pharmaceutical suppliers in Australia and among the top 10 pharmaceutical companies in the Australian pharma market.

The business, which will operate under the Arrow Pharmaceuticals brand, will sell approximately 140 generic prescription drugs and a range of non-prescription pharmacy products. The business and the assets being acquired will give Strides group one of the largest pharmaceutical product portfolios in the Australian market, the note said. The new Arrow Pharmaceuticals business will be led by Dennis Bastas, the previous founder and CEO of Ascent Pharmahealth Ltd.

"The acquired products had sales of approximately A$120 million in the past financial year (June 2014) with an EBITDA margin of approximately 31 per cent.  The consideration for the acquisitions will be approximately A$380 million. The acquisition of the business will include access to the product pipeline that was under development by Aspen and includes a number of major product launches in the next six months," the company release added.

In terms of timing, Arun Kumar told Business Today that the deal was strategic and that it would add around $120 million to Strides' revenues to "give us a run rate of around $760 million for the next financial year".

That is significant considering that Arun Kumar, who was ranked among the best CEOs in December last year by Business Today had sold Strides' injectibles business - Agila Specialties - to US pharma giant Mylan for a whopping $1.65 billion. This was more than three times Strides' revenue of around $500 million at the time.