Ahmedabad/Mumbai: Torrent Pharmaceuticals Ltd, the flagship company of the Ahmedabad-based Torrent group, on Friday said it had agreed to acquire the branded business of Unichem Laboratories Ltd in India and Nepal for Rs3,600 crore.

Torrent Pharmaceuticals, with annual revenue of more than Rs5,800 crore, said it has entered into a definitive binding agreement with Unichem on Friday.

Unichem has a portfolio of more than 120 brands it sells in India and Nepal and a manufacturing plant in Sikkim that caters to these markets.

“The deal will add more than Rs1,000 crore annually to Torrent’s turnover. Also, post-acquisition, Torrent will enter the list of top five pharma firms in the country and will be ranked at number five," said a senior Torrent group official who did not want to be named.

Torrent Pharmaceuticals is likely in advanced discussions to acquire the domestic formulations business of Unichem Laboratories for Rs3,200-3,300 crore, Mint reported on 31 October, citing two people aware of the development.

“The transaction is a strategic fit for Torrent and will strengthen its position in the key segments of cardiology, diabetology, gastro-intestinals and CNS (central nervous system) therapies. It is also expected to realize cost and revenue synergies in Torrent’s branded business in India," Samir Mehta, chairman of Torrent Pharmaceuticals, said in a statement.

The acquisition will help Torrent increase its Indian pharma market share in terms of sales to 3.4% from 2.4%. Torrent will fund the acquisition through a mix of internal accruals and bank borrowings.

This is Torrent Pharmaceuticals’s fifth acquisition in India.

It had acquired selected brands of Elder Pharmaceuticals Ltd and Novartis India Ltd, as well as manufacturing plants from Zyg Pharma Pvt. Ltd and Glochem Industries Ltd.in the last four years.

“We have not been seeing many domestic deals, particularly because foreign players’ interest has reduced. This Torrent-Unichem deal is a one-off but it could be seen as a step towards consolidation in the domestic market. Unichem is a good and clean asset, and such assets will find buying interest," said Sujay Shetty, pharma practice leader for India and Asia Pacific at PricewaterhouseCoopers.

Unichem said in a separate statement that it will remain an independent publicly listed company with no change in its existing shareholding following the transaction.

The deal will enable Unichem to focus more on its international business, including finished formulations, active pharmaceutical ingredients, contract manufacturing and contract research.

The transaction, according to Unichem, is expected to close by the end of 2017. Proceeds from the deal would allow it to increase its investments in research and development of new chemicals, biological entities, bio-similars and complex generics, Unichem said.

As many as 3,000 employees will be added to Torrent’s existing employee workforce after the Unichem acquisition.