Aurobindo Pharma Acquires Apotex Inc for 74 Mn Euros, Expands in Europe

One of the largest healthcare service providers, Aurobindo Pharma has entered into an agreement with Apotex Inc which will help the company expand its business operation in five European countries. The acquisition was made by its wholly-owned subsidiary Agile Pharma B.V. (Netherlands) last week to  acquire commercial operations and certain supporting infrastructure in five European countries viz. the Netherlands, Belgium, Spain, Poland and Czech Republic from Apotex International Inc. a Canadian pharmaceutical company engaged in the manufacture and marketing of pharmaceutical products.

Net sales for the acquired business were approximately EUR 133 million in the fiscal year ended March 2018.

Agile Pharma B.V. will acquire 100% of share capital of the following entities: Apotex N.V. (Belgium), Apotex (CR) spol s.r.o. (Czech Republic), Apotex Europe B.V. (Netherlands), Apotex Nederland B.V. (Netherlands) and its subsidiaries, Apotex Polska sp. z.o.o. (Poland) and Apotex Espana SL (Spain).

These entities control certain commercial operations and certain supporting infrastructure in the Netherlands, Belgium, Spain, Poland and Czech Republic.

Acquisition helps the Aurobindo to expand in key markets of Eastern Europe and create significant value through synergies viz.

Aurobindo Pharma's Expansion in Europe

Aurobindo will acquire commercial infrastructure including experienced personnel, products, marketing authorizations and dossier license rights in Poland, the Czech Republic, the Netherlands (including the manufacturing facility in Leiden), Spain and Belgium.

Over 200 generics and more than 80 over-the-counter (OTC) products to extend and diversify Aurobindo’s European product portfolio.

In Poland and the Czech Republic, Aurobindo will become one of top 15 generics (Gx) companies in each country.

In Poland, Aurobindo will add significant sales based on the established brand name “APO” and a dedicated sales force covering physicians and the pharmacy network.

Aurobindo will also add an OTC offering in the Netherlands and will become a leading OTC company by volume.

In Belgium, the acquisition will provide Aurobindo with an entry into the retail generics space, where it will become a top 5 player.

Reaction from Stock Market

On Friday, the stock price of Aurobindo ended at Rs 602.90 slightly down by 0.58% on BSE. This week it is expected to attract investors' attention because of this major expansion news.

According to Aurobindo, closing of the transaction is conditional on the receipt of competition clearances for the transaction by the Dutch and Polish authorities.

The deal is expected to complete within  3-6 months of the signing date.

Transactions would be made wholly in cash, for which Aurobindo will pay somewhat 74 million euros (which is approx Rs 5 billion). The company will not assume any debt as part of this transaction.

Aurobindo in the notification said, “Although some of these businesses are currently loss-making, the Company expects them to return to profitability when combined with the Company’s vertically integrated platform and existing commercial infrastructure.”

Aurobindo has been expanding its European footprint since 2006 both organically and via carefully selected acquisitions across several key markets, most notably in 2014 with the acquisition of Actavis’s commercial operations in seven Western European countries and in 2017 with the acquisition of Generis Farmaceutica in Portugal.

Aurobindo currently has a presence in nine European countries, Portugal, France, Germany, the Netherlands, Spain, Italy, Belgium, UK and Romania.