Samir Mehta is building Torrent Pharma through a string of acquisitions

Mehta is silently working on plans to offset risks through acquisitions and entry into new geographies

At 52, Samir Mehta, the vice-chairman of the $2.9-billion Torrent Group and chairman of Torrent Pharma, is focused on his goal. After taking full charge of Torrent three years ago, Mehta has not only made it to the fifth spot on the most valued CEOs list of 2017 but has also pulled off three acquisitions. Torrent is all set to make its second acquisition this year and the biggest since its Elder Pharma deal in December 2013 — Unichem's domestic formulations business. 

Mehta became the chairman of Torrent Pharma in May 2014. 

Mehta has been instrumental in identifying new opportunities and taking risks. One of his key strategic moves was the acquisition of Elder Pharma's domestic portfolio (at that time, his brother Sudhir Mehta was the chairman of Torrent Pharma) to boost the company's local sales. Mehta Junior also saw to it that Torrent focussed on the US market by launching some niche products like psychotropic drug Aripiprazole in 2015-16. Torrent’s US business soared some 220 per cent in FY15-16 to Rs 2,671 crore. 

Usually reclusive, Mehta is silently working on plans to offset risks (Torrent's US business has come under heat in FY17) through acquisitions and entry into new geographies. 

The financial year 2016-17 was tough for Torrent. Its Ebitda (earnings before interest, tax, depreciation, and amortisation) stood at 27 per cent compared to 44 per cent in the previous year, showing a de-growth of 17 per cent. Mehta was quick to realise that while it would take some time to boost the US pipeline, it was apt to shore up the domestic business. The acquisition of Unichem's domestic business is thus likely to provide that much needed shot in the arm for Torrent's local business. 

Torrent's Elder deal has gone well. Torrent bought 30 brands from Elder in India and Nepal for Rs 2,004 crore. The deal helped Torrent to significantly increase its share in the women's healthcare and pain management segments in the Indian market. Shelcal, an erstwhile Elder brand that came into Torrent's portfolio, is now a Rs 300-crore brand and Torrent has been introducing new extensions of it. 

Mehta's close aides, however, say that he looks for "value" in each of his acquisitions. "He has a clear vision and is not easily swayed by temporary setbacks. He focuses on the long-term prospects. While Torrent has clearly drawn up a strategy to grow inorganically in the Indian and US markets, Mehta wouldn't go for a deal until he sees long-term value in it. He is not one who acquires assets in distress sale because they are coming in cheap," said someone who has worked with him closely. 

Mehta has decided to enhance focus on research and development (R&D). Torrent's R&D expenditure grew a whopping 76 per cent in FY17 to Rs 432 crore, or around seven per cent of its turnover. Moreover, the company is spending less than 25 per cent of its annual R&D budget on novel drugs. 

His brother Sudhir Mehta is also known to be a calculated risk taker. Both the brothers share a great camaraderie and working rapport. While Sudhir mainly looks after the group's power business, he is known to have guided his brother in strategic matters for Torrent Pharma as well. The next generation of Mehtas in Torrent (Sudhir and Samir's sons) have all joined the power business and are getting groomed by Sudhir closely.

Trinity Laboratories, a company started by Mehta’s father U N Mehta, began operations in the early 70s.  Following U N Mehta’s death, his elder son Sudhir took over as chairman of the group in 1998 and it was he who turned attention towards export markets. At one point, 70 per cent of Torrent' sales and around 90 per cent of its profits came from the erstwhile Soviet Union. 

However, after the disintegration of the Soviet Union, the company had faced a temporary crisis. The brothers did not lose heart. They also learnt a key lesson: To diversify to minimise risk. Hence, the group focussed on the domestic market and other international geographies and never lost focus of the power business.