 "Eris up 8% as it plans to acquire nephro, derma units of Biocon Biologics")
The deal consideration is for Rs 366 crore, inclusive of working capital and will be funded partly through debt financing.
Eris, in an exchange filing, said that the company has signed a definitive agreement with Biocon Biologics, a subsidiary of Biocon, to acquire its Branded Formulations’ India (BFI) business units of Nephrology and Dermatology.
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The business includes over 20 mother brands with FY23 revenue of Rs 90 core and current revenue run-rate of Rs 100 crore. The deal consideration is Rs 366 crore, inclusive of working capital conveyed as part of the deal. The key leadership and the entire field force of this business, consisting of over 120 personnel, are expected to move to Eris post deal, the company said.
This is a strategic addition to Eris' flagship cardiometabolic business, and, post deal, Eris will offer end-to-end care to patients starting with diabetes/ hypertension and all through to Chronic Kidney Disease (CKD).
"The acquisition of Biocon's BFI business units also enables Eris to consolidate its position in Dermatology. Post deal, Eris would become the second largest player in Psoriasis with 11 per cent market share. Dermatology is all set to become Eris' third largest therapy soon, after diabetes and cardiovascular. With dominant market positions in 3 of the Top-5 chronic therapies, Eris is well-positioned to deliver market leading growth in the years to come," the company said.
Power brands like Tacrograf and Renodapt in Organ Transplants and emerging brands like Bionesp and Erypro in CKD induced anaemia provide a strong platform to kick-start the Nephrology franchise at Eris. The leading brands like Psorid, Tbis, Picon and Calpsor will complement existing Medical Dermatology portfolio of Eris.
The recent acquisition of Biocon's business enables Eris to make in-roads in Nephrology and expand its derma offerings. In the past 12 months, Eris has spent about Rs 1,600 crore in total on acquisitions.
The acquisition of Biocon business is expected to be earnings neutral in FY25.
Motilal Oswal Financial Services said it continues to value Eris at 23x 12M forward earnings to arrive at a target price of Rs 930.
"In addition to its core therapies of anti-diabetes, cardiology and VMNs, Eris has enhanced its presence in dermatology and nephrology through acquisitions, thereby expanding its overall offerings in the branded formulation space. The current valuation adequately factors in the upside in earnings," the brokerage firm said while maintaining 'Neutral' rating on the stock.