Rise of cosmetic dermatology space gets big pharma looking for buyouts

According to reports, Torrent Pharmaceuticals is set to sign a deal to acquire Curatio Healthcare, a maker of skincare products, for Rs 2100 crore.

The fast-growing cosmetic dermatology space is attracting big players such as Torrent Pharmaceuticals, which is in the race to make a big acquisition in the segment.

According to reports, the company is set to acquire Curatio Healthcare, which makes skincare products, for Rs 2,100 crore.

The Rs 240-crore company, which has about 50 products prescribed by 6,000 doctors and a network of 700 distributors, has been valued at a premium.

A senior executive at a firm, also in the race to buy Curatio, said its portfolio of cosmetic-dermatology brands made it lucrative.

“The average prescription value of dermatology is high because the products are relatively expensive. With growth in cosmetic dermatology products, the value is around Rs 1,000,” said the executive.

Apart from Torrent Pharma, Zydus Lifesciences, Dr Reddy’s Laboratories, and JB Chemicals are reportedly in the race to buy Curatio.

The Rs 11,400-crore derma market in India is growing at 7-8 per cent annually. Industry insiders point out there has been growth in cosmetic dermatology products like the ones for acne, hair fall and dandruff.

These products are outside price control and thus offer better margins to manufacturers.

Curatio’s product range covers hair, body, face and baby products.

Paediatric dermatology is another area where parents go for doctor-prescribed products, even soaps and shampoos.

“With the recent controversy surrounding the talcum powder of a renowned company, many parents go for doctor-prescribed skincare products for their kids. If a company with strong marketing muscles pushes those, these products can grow fast,” said another industry executive.

In its first-quarter review of Torrent Pharmaceuticals, Edelweiss analysts noted Torrent’s India performance was improving.

“Torrent Pharma recorded four consecutive quarters of double-digit growth in India aided by price hikes and new launches. Sales force expansion to show benefits in coming quarters,” the brokerage said, adding that with all pharma companies taking high single-digit price increases, the widening price differential of Torrent Pharma’s brands should now be arrested.

New launches are contributing around 3 per cent to growth.

India is Torrent’s key market, accounting for 74 per cent of its revenues. The company has been aggressive in making acquisitions in India -- the domestic business of Unichem (Rs 3,600 crore), Elder Pharma’s local formulations business (Rs 2,004 crore), and Zyg Pharma (derma player).

It has also bought a portfolio of brands from Novartis and recently from Dr Reddy’s Laboratories.

“Torrent’s strength lies in its ability to cross-sell. It has a field force from its acquisitions, and cross-sells products across segments. It recently added to its field force, taking the total to 4,200 after the first quarter, and launched two divisions,” said an analyst who tracks the company.

He, however, said dermatology was a growing area for the company, and it would need a strong field force to compete with players like Glenmark, Ajanta Pharma, Sun Pharma, and GSK.