JB Chem to buy Russian firm

INDIA INC ON THE MOVE

This may be one of the biggest overseas acquisitions by an Indian pharma company.

JB Chemicals and Pharmaceuticals has zeroed in on a few formulation and pharmaceutical packaging companies in Russia. This could be one of the biggest overseas acquisitions by an Indian pharmaceutical company.

JBPCL Director Dinesh B Mody told Business Standard today that the company was in the process of shortlisting a few Russian firms. He added that the investment for the acquisitions in Russia, the largest export market for the company, was expected to be "substantial".

Though Mody was unwilling to disclose the deal size, sources close to the developments said it could be much bigger than the turnover (Rs 371 crore in the last financial year) of JBPCL.

"It can be a case of a David taking over a Goliath," the sources said. The sources added the company might go in for a leveraged buyout. "Going by the fundamentals of the company, fund raising will not be an issue," an industry expert said.

Mody said the company was geared up to meet the challenges of the emerging generic drugs market across the globe with a strong regulatory team, which supported the international division and helped in formulation development, analytical testing and quality assurance, and in the manufacturing set-up.

The proposed acquisition in Russia is part of this plan. "Also, we want to explore the investment-friendly atmosphere in Russia," Mody said.

He also said the company was scouting for a joint venture partner in Russia, but declined to provide further details.

The company expects sales to touch Rs 450 crore in the current financial year, of which about 60 per cent will be from exports. By 2008-09, it targets Rs 1,000 crore under its vision of "Panchratna" which represents its five strengths "" research, regulatory affairs, finance, marketing and manufacturing. The company's net profit was Rs 59 crore in the year ended March 2005.

The company, which opened an office in Moscow in 1994, was one of the few Indian companies to respond to the investment opportunities thrown up by a liberalised Russian economy. It has 45 medical representative and 35 distributors and importers in Russia and the CIS.

JB Chemicals' cough syrup brand Doktor Mom is a market leader in Russia with sales of over Rs 80 crore.

"Russia now offers a great opportunity for several reasons. Like India, the Russian market is largely made up of generics. The population of Russia is relatively small, is spending more on health care, and making the country's pharma industry grow twice as fast as India's," Mody added. 
 

Injecting growth

• This may be one of the biggest overseas acquisitions by an Indian pharmaceutical company
  
• The deal size may be more than Rs 371 crore
  
• The company may go for a leveraged buyout
  
• Mody said the company was scouting for a joint venture partner in Russia