Torrent Pharma to acquire India business of Unichem for Rs 3,600 crore

Ahmedabad-based pharmaceutical firm Torrent Pharmaceuticals on Friday said it will acquire the branded business of Unichem Laboratories in India and Nepal for Rs 3,600 crore marking a major consolidation move in the pharma sector. Unichem's business under consideration comprises a portfolio of over 120 products, manufacturing plant at Sikkim catering to these two markets and all the employees engaged in it, Torrent Pharmaceuticals said in a filing to the BSE. The transaction is on a going concern basis by way of slump sale, it added.

The deal will be funded by internal accruals and bank borrowing, the Ahmedabadbased drugmaker said. Unichem has not been able to leverage its slow-growing, mature brands portfolio, analyst said. But Torrent will be able to turn them around, as it has done with Elder Pharmaceuticals Ltd, they added.

Torrent acquired Elder Pharma's branded formulations business for about Rs 2,000 crore in 2014. Analysts expect Unichem to use the proceeds from the deal to ramp up its unprofitable international business. The transaction will strengthen Torrent's position in cardiology, diabetology, gastro-intestinals and central nervous systems therapies, Torrent chairman Samir Mehta said.

The deal includes the purchase of the brand Unienzyme, allowing Torrent to enter the over-the-counter drugs market, as well as brands including Losar, Ampoxin and Telsar. Under the acquisition, which is expected to close by the end of 2017, more than 3,000 Unichem employees will join Torrent.

Unichem said after the sale it will continue to have greater focus on international business comprising of manufacturing, selling and marketing of fixed dosage formulation and API, in addition to investing on complex generics and biosimilars.

"The deal will enable the organisation to deliver superior results in areas of innovative research, new chemical and biological entities and move into next orbit of growth," said Prakash Modi, Chairman of Unichem Laboratories. Analysts said the deal was overvalued as Unichem products are old molecules, growing at slower pace which may extend the payback period for Torrent.