Dr Reddy's buys betapharm for Rs 2,600cr

Hyderabad-based Dr Reddy's Laboratories and 3i, Europe's leading private equity house, entered into a definitive agreement today for the Indian company's bid to acquire betapharm group, the fourth-largest generic pharmaceuticals company in Germany.

This is the biggest-ever overseas acquisition by an Indian pharma company. 

The deal for the 100% acquisition of the German firm, which was promoted by 3i, is pegged at a total enterprise value of euro 480 million (over Rs 2,600 crore) in cash, according to a press release issued by Dr Reddy's here today.

Commenting on the acquisition, Anji Reddy, chairman of Dr Reddy's Laboratories, said the investment in betapharm was a key strategic initiative towards becoming a mid-sized global pharmaceutical company with strong  presence in all key pharmaceutical markets. "betapharm has created a strong growth platform and is well-positioned for the future. We are looking forward to partner with them in building a strategic presence in Europe," he said.

The transaction will be funded using a combination of internal cash reserves and committed credit faculties, the release added.

Dr Reddy's produces finished dosage forms, active pharmaceutical ingredients and biotechnology products, and markets them globally with a focus on India, Europe and Russia.

Founded in 1993, betapharm is the fourth largest generics company in Germany with a market share of 3.5%. It markets high-quality generic drugs with a focus on long-term therapy products with high prescription rates, and is the fastest growing generics company over the past five years in the top 10 in Germany, the release said.

Dr Reddy's is expected to re-establish its position among the Indian drug companies through the acquisition of betapharm, which has a strong track record of successful product launches. betapharm's current portfolio comprises about 145 marketed products.

Located in Augsburg, Germany, betapharm currently employs about 370 people including a sales force of about 250 with a gross turnover of euro 164 million in 2005, the release said.

Commenting on the development, G V Prasad, vice-chairman and CEO of Dr Reddy's, said: "We strongly believe that this strategic investment will generate substantial opportunities for long-term value creation for both the companies. The combination of the two companies will enable betapharm to continue to expand its growth trajectory, and, at the same time, provide a strong foundation to leverage Dr Reddy's global product development and marketing infrastructure to build a significant generics business in Europe in the long-term."

Wolfgang Niedermajer, CEO of betapharm, said: "Dr Reddy's impressive pipeline of generics and innovative products and its high quality standards combined with competitive manufacturing infrastructure will help further develop our position in the German market and offer an entry platform for the European market."