Torrent Pharma buys out Unichem

New Delhi, November 05, 2017: Pharmaceutical stocks, which were lying low bounced back this past week with second quarter results largely in line with analyst expectations on recovery of domestic formulation business after disruption caused due to GST transition in the first quarter. Torrent Pharmaceuticals’ acquisition of Indian branded business of Unichem Laboratories and USFDA lifting import ban on Divis Laboratories‘ Unit-II in Visakhapatnam are highlights of the week.

How did Pharma Index Perform?

The BSE Healthcare index gained 2.51 percent in the past week, the benchmark Sensex rose 1.28 percent.

Divis was the biggest gainer this week with its stock rising 20.18 percent followed by Biocon (12.83 percent),  Torrent  (5.21 percent), Lupin (4.4 percent), Aurobindo Pharma (3.13 percent), Glenmark (2.75 percent) and Cipla (2.58 percent).

According to Moneycontrol.com two stocks that did not participate in the rally this week include Sun Pharma which was flat, and Cadila Healthcare (-0.12 percent) shares dropped marginally.

Here’s what kept the sector buzzing:

Torrent Pharma said that it has entered into a definitive binding agreement with Unichem to acquire its branded business of India and Nepal for a consideration of Rs 3,600 crore. Unichem’s India business comprises a portfolio of more than 120 brands in India and Nepal, a manufacturing plant at Sikkim catering to these markets and all the employees engaged in the said business.

Divis Laboratories said it was informed by the USFDA that it will be lifting the import alert 66-40 and moving to close out the warning letter issued to the company at Unit-II in Chippada, Visakhapatnam. The announcement marks the complete resolution of the import ban, removing the regulatory overhang on the stock.

Five Indian generic drug makers were named in the expanded anti-trust investigation opened by Connecticut and 45 other US states for alleged conspiracy and collusion to unreasonably restrain trade, artificially inflate and manipulate prices and reduce competition. This was in addition to the previous lawsuit filed against two other Indian drug makers Heritage Pharmaceuticals a part of Emcure, and Aurobindo Pharma.

Dr Reddy’s Laboratories has reported consolidated profit for July-September quarter at Rs 284.9 crore, lower by 3.4 percent compared with Rs 295 crore in year-ago period. The profit was slightly better than analyst estimates due to improvement in operational performance.

India’s second largest drug maker Lupin posted 31 percent decline in net profit to Rs 455 crore in the second quarter ended September 30 on account of dip in US sales, despite strong performance in other markets. The company reported net profit of Rs 662.9 in the same period of previous year. Total revenue from operations dropped 8 percent to Rs 3951.9 crore from Rs 4,290.5 crore.

Moneycontrol.com  further adds that Torrent Pharma reported flat second quarter ended September due to plummeting sales in US, despite improved performance of domestic formulations and German generics business. The company posted net profit declined 1.45 percent to Rs 204 crore compared to Rs 207 crore in the corresponding quarter of previous year. Revenues were static at Rs 1429 crore year-on-year basis.

According to hindu businessline, after taking charge as the Executive Chairman of the pharma arm of the ₹18,300-crore Torrent Group in 2014, Samir Mehta’s vision was to bring value to the company. Refraining from the ranking game, Mehta kept his focus on value-pick thereby opening new avenues to unlock future growth.

The Elder Pharma acquisition in late 2013 put Torrent Pharma in the league of top pharma conglomerates. In an interview with BusinessLine, Mehta had indicated his aggressive and definite growth strategies. “We continuously look for strategic inorganic opportunities as we believe they are integral part of our growth story,” Mehta said. The company eyes stronger position in the therapeutic areas of cardiovascular (CV) and central nervous system (CNS).

Hindu businessline further adds that Mehta, the younger son of the founder of the Torrent empire late UN Mehta, has been associated with the company since 1986. It is under Mehta’s leadership that Torrent Pharma is leading the consolidation of India’s pharma sector. Having learnt tough lessons from the disintegration of the Soviet Union (USSR) in early 1990s, when the company had to face severe losses, Mehta consciously decided to keep his businesses diversified with strong focus on the Indian market.