Hyderabad: Arch Pharma Labs Ltd, a Mumbai-based pharmaceutical ingredients company acquired two Hyderabad-based closely held drug companies for Rs70 crore. The firm, controlled by three private equity funds, has set out a Rs145 crore expansion plan with the intention of doubling revenues.
While Watsol Organics Ltd was acquired for Rs30 crore last week, Sibra Pharmaceuticals Ltd was bought for Rs40 crore in April, the acquirer said Wednesday. Watsol is a maker of pharmaceutical and agro-chemical intermediates, while Sibra is also into production of pharmaceutical ingredients.
The Watsol buy marks the fifth acquisition by Arch Pharma and third in Hyderabad, including Merven Drugs Products Ltd in 1999.
“The acquisition of Watsol would strategically supplement and further augment our global leadership position in the isoxazole business, thus, meeting the growing demand in the industry. The Sibra facility would enhance our API (active pharmaceuticals ingredients) business and open new avenues for us,” said Ajit A. Kamath, chairman and managing director of Arch Pharma. Isoxazole is a semi-synthetic form of penicillin.
Arch Pharma said it will spend Rs70 crore to expand the two acquired facilities, of which Rs40 crore would be spent on Sibra and Rs30 crore would be invested on Watsol. Arch also said it had finalized the expansion of its Gurgaon facility near New Delhi at an investment of Rs65 crore and will set up the second phase of a corporate research and development facility in Taloja, near Mumbai, for Rs10 crore.
The funds will come from private equity, debt and internal sources even as Arch Pharma explores another round of capital infusion from private equity, said Kamath.
Arch Pharma, which posts an annual revenue of Rs350 crore, has six manufacturing facilities in three states and is 58% controlled by the buyout firms ICICI Venture Ltd, IL&FS Investment Managers Ltd and Swisstec Venture Capital Fund, with promoters of the company owning the rest.
The drug maker, which expects to close the fiscal year 2008 with revenues of Rs500 crore, is targeting sales of Rs1,000 crore by 2009-10.
“For small pharmaceutical companies, attaining leadership in their respective product category is imperative to face competitive pressures,” says Sarabjit Kour Nangra, vice-president, research, with Angel Broking Ltd.