Alkem close to buying two firms

Alkem Laboratories, the sixth largest Indian pharmaceutical company in terms of domestic business, is close to acquiring two pharmaceutical companies with valuations of about Rs 60-100 crore ($15-25 million) each in the UK and Germany, which will give it an entry into the US and European drug markets.

"We have zeroed in on targets in the UK and Germany. These are small to medium

formulation companies. Negotiations are on and we hope to close these two deals at the earliest," said Samprada Singh, chairman, Alkem Laboratories.

Alkem is also evaluating other small-sized pharmaceutical companies in the US, in the range of $40-60 million.

The US acquisition could happen by the end of the year. The company may also acquire domestic brands in lifestyle and specialised therapy groups or companies with speciality products in the domestic market.

The domestic acquisitions could be of the value of about Rs 100-150 crore. Alkem Laboratories has sufficient cash surplus to fund the acquisitions. If required, a part of the funds would be mobilised through the debt route, Singh said.

At present, exports constitute only about Rs 70 crore of the Rs 1000 crore-plus Alkem Laboratories, still an unlisted company. The company plans to double the turnover by 2010, with exports contributing not less than Rs 250 crore and the recently floated foods division about Rs 250-500 crore, annually.

"Our strategy will be to leverage our strength in the domestic market and to tap the high-value regulated drug markets of the US and Europe in the coming years," said S Krishna Kumar, general manager, business development.

Germany and UK are the largest drug markets in Europe and the acquisitions will provide Alkem a direct entry into Europe.

Alkem, which already has tie-ups with companies like Pliva, will soon sign strategic marketing alliances with some of the largest drug companies in Europe and the US, said S M Raina, senior vice president, international operations.

Some of the manufacturing facilities at Daman in Goa will be upgraded soon to conform to US Food and Drug Administration standards.

Alkem hopes to lauch about 20 products in the US markets within a few years.

The Research and Development Centre in Bangalore also has been upgraded with an investment of Rs 100 crore to house about 200 scientists to work on drugs going off-patent, Singh said.