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Business News/ Companies / News/  Eris Lifesciences not eyeing any big acquisitions for now, says MD Amit Bakshi
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Eris Lifesciences not eyeing any big acquisitions for now, says MD Amit Bakshi

Eris Lifesciences will focus on consolidating the business and not venture into acquisition of any big-ticket assets, says managing director Amit Bakshi

Eris Lifesciences will also break into the league of top 25 companies having a market share of more than 1% in the Indian pharmaceutical market.Premium
Eris Lifesciences will also break into the league of top 25 companies having a market share of more than 1% in the Indian pharmaceutical market.

Mumbai: After four acquisitions in one year, including the latest buyout of India business of Strides Shasun Ltd, Ahmedabad-based Eris Lifesciences Ltd will focus on consolidating the business and not venture into acquisition of any big-ticket assets, managing director Amit Bakshi said.

However, the company will continue to look for acquisitions of brands that fit into its product basket and eye opportunities to in-licence drugs, he said.

With the Rs500 crore acquisition of Strides’s domestic formulations business, Eris will be among the top 10 companies in the central nervous system (CNS) drugs segment in the country. Since its inception in 2007, Eris has focused on the chronic segments of cardiology and diabetes and forayed into the CNS segment only recently.

Eris will also break into the league of top 25 companies having a market share of more than 1% in the Indian pharmaceutical market.

The company plans to fund the acquisition through a mix of internal accruals and debt, Bakshi said. As of September-end, Eris Lifesciences had Rs410 crore of cash on books and zero debt.

“The Strides portfolio is a perfect fit for our business as it will strengthen our position in the key segments of CNS and gastrointestinal therapies and does not clutter our portfolio with segment like antibiotics," Bakshi said, adding that this acquisition is likely to improve Eris Lifesciences’s gross margins over next year.

According to a Citi Research report, gross margins of Eris Lifesciences can expand from 69% currently to 75% over a year due to cost synergies.

“We see significant synergies as the two businesses come together, which along with use of cash reserves for funding make this highly EPS (earnings per share) accretive. We build in high upside from cost and efficiency synergies but not the full revenue potential, as this could take longer to execute," the Citi Research report said.

In financial year 2016-17, the company reported sales of Rs725 crore, up 21.5% from a year ago. Its chronic segment revenue has increased at a compounded annual growth rate (CAGR) of 29% from FY13 to FY17.

The acquired business of Strides had a turnover of Rs181 crore in fiscal year 2016-17, which adds 20% to Eris’s current revenue base.

In a report dated 4 October, broking firm Systematix Institutional Equities said, “We maintain a positive stance on the stock, considering the management’s focus on specialty drugs, ability to cherry pick products having huge unmet demand, which ensures a healthy Ebitda (earnings before interest, tax, depreciation and amortisation) margin."

At 11am, shares of Eris Lifesciences were trading up 3.6% at Rs647.00 on the BSE, while benchmark Sensex index was up 0.5% at 33,539.48 points.

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Published: 21 Nov 2017, 11:43 AM IST
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