Takeda, Japan's largest pharmaceutical firm, has begun talks with two of India's biggest companies for purchasing either of their pharma businesses. The Osaka-headquartered Takeda, which unlike rival Daiichi Sankyo does not have a large presence in the country, has approached Cipla, India's second-largest drug firm by market share, and Lupin, the fifth-biggest by market share for talks, two people with direct knowledge of the development told ET.
Talks with the Mumbai-based DB Gupta-promotedLupin have progressed beyond the initial stage, they added. Takeda is interested in buying the domestic formulations business, along with Lupin's research facility. But the promoters are unwilling to part with the research facility and are insisting on a price that values the company at 17 times its revenue, one of the persons close to the negotiations added. Lupin's FY11 revenue was $1.5 billion. Another person with direct knowledge of the talks said that preliminary negotiations have been held with the YK Hameid-promoted Cipla. He added that Takeda is very keen on a large buyout in the country, but there is no certainty that the talks will lead to a conclusive deal. Takeda did not respond to the email query sent by ET.
Antara Mukherjee, Cipla spokesperson, denied any transaction. "We are not in talks with anyone either to sell our company or any of its brands," she added. "We, as a policy, do not comment on baseless market speculation," Lupin spokesperson said.
India's domestic market is one of the fastest-growing markets in the world and consultant firm McKinsey & Co expects it to grow to $55 billion by 2020 from about $12 billion now. Takeda entered India late and is eager to catch up with rival Sankyo and other global pharma giants, some of whom have done big-ticket acquisitions. Last year, US-based Abbott bought Piramal Healthcare's formulations business for about 17,000 crore to become the country's biggest pharma firm by market share. In 2009, Daiichi Sankyo purchased Ranbaxy for $3.5-4 billion to become India's largest pharma player by revenue. "This is a big market for global pharma giants," said Ranjit Kapadia, Centrum Capital. Last year, Takeda appointed the former Roche executive Shankar Suryanarayanan as its India head and announced a medium range plan from 2010-12, including tie-ups with local companies.
Buying out either Cipla or Lupin's formulations business would be extremely productive for Takeda. Cipla is the second-largest generic maker in the country by market share, while Lupin is the fifth-largest player. Both have strong brands and wide distribution network that touches all major cities and towns. Cipla shares fell 2% to 282 on Tuesday. Lupin slipped 0.4% to 438.
M&A deals are very common in India's pharma market, but talks don't always lead to conclusive transactions. Last year, US giant Merck was widely believed to be in talks with Cipla, but the company denied it strongly and there was no transaction. In July this year, Bloomberg reported that Lupin had put its domestic formulations unit for sale, but the company denied the news.
Talks with the Mumbai-based DB Gupta-promotedLupin have progressed beyond the initial stage, they added. Takeda is interested in buying the domestic formulations business, along with Lupin's research facility. But the promoters are unwilling to part with the research facility and are insisting on a price that values the company at 17 times its revenue, one of the persons close to the negotiations added. Lupin's FY11 revenue was $1.5 billion. Another person with direct knowledge of the talks said that preliminary negotiations have been held with the YK Hameid-promoted Cipla. He added that Takeda is very keen on a large buyout in the country, but there is no certainty that the talks will lead to a conclusive deal. Takeda did not respond to the email query sent by ET.
Antara Mukherjee, Cipla spokesperson, denied any transaction. "We are not in talks with anyone either to sell our company or any of its brands," she added. "We, as a policy, do not comment on baseless market speculation," Lupin spokesperson said.
India's domestic market is one of the fastest-growing markets in the world and consultant firm McKinsey & Co expects it to grow to $55 billion by 2020 from about $12 billion now. Takeda entered India late and is eager to catch up with rival Sankyo and other global pharma giants, some of whom have done big-ticket acquisitions. Last year, US-based Abbott bought Piramal Healthcare's formulations business for about 17,000 crore to become the country's biggest pharma firm by market share. In 2009, Daiichi Sankyo purchased Ranbaxy for $3.5-4 billion to become India's largest pharma player by revenue. "This is a big market for global pharma giants," said Ranjit Kapadia, Centrum Capital. Last year, Takeda appointed the former Roche executive Shankar Suryanarayanan as its India head and announced a medium range plan from 2010-12, including tie-ups with local companies.
Buying out either Cipla or Lupin's formulations business would be extremely productive for Takeda. Cipla is the second-largest generic maker in the country by market share, while Lupin is the fifth-largest player. Both have strong brands and wide distribution network that touches all major cities and towns. Cipla shares fell 2% to 282 on Tuesday. Lupin slipped 0.4% to 438.
M&A deals are very common in India's pharma market, but talks don't always lead to conclusive transactions. Last year, US giant Merck was widely believed to be in talks with Cipla, but the company denied it strongly and there was no transaction. In July this year, Bloomberg reported that Lupin had put its domestic formulations unit for sale, but the company denied the news.
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