Sun Pharma plans to take over Pradeep Drugs

By The Mumbai-based, Rs.476-crore turnover pharma maj | 16 Feb 2001

1
The Mumbai-based, Rs.476-crore turnover pharma major, Sun Pharmaceutical Industries, is back into the mergers and acquisitions arena. After having merged Tamil Nadu Dadha Pharmaceuticals with itself over four years ago, the company is now planning repeat the act with yet another Chennai-based company, the bulk drug producer, Pradeep Drugs Company, currently a BIFR case.

According to Mr. Mohanchand Dadha, director of the company, the board of directors, which is shortly to approve the take over, will appoint an independent valuer for the valuation and the share-swap ratio of Pradeep Drugs. Forty per cent of Rs. 9.2 crore-equity is held by the Dadha family and associates, with the balance being held by the public.

Pradeep Drugs was originally floated to cater specifically to the Russian market. With the collapse of the, then, Soviet Union, the company hit a bad patch with capacity utilisation being a mere 20 per cent and became a BIFR case. Despite this, the company has managed to clear all its debts.

With the merger of Tamil Nadu Dadha Pharmaceuticals into Sun Pharmaceuticals, Pradeep Drugs began supplying bulk actives to Sun Pharmaceuticals, increasing the capacity utilisation to 80 per cent. Currently, the largest selling bulk drugs from Pradeep Drugs are clarithromycin, azithromycin and erythromycin.

The merger with Pradeep Drugs, though not likely to increase its turnover, will provide Sun Pharmaceuticals with another manufacturing facility in Chennai. Unlike in the case of the Tamil Nadu Dadha merger, where Sun Pharma closed down the former's manufacturing facilities, in this case the company plans to keep the Pradeep Drug plants running.

Sun Pharmaceuticals currently owns three bulk drug manufacturing facilities. A dedicated facility at Ankleshwar (the erstwhile Gujarat Lyka plant) manufactures Cephalexin. High value-added complex specialty bulk drugs are manufactured at Panoli and Ahmednagar. The company has already initiated filing of Drug Master Files (DMF) from Panoli and Ahmednagar, and 4 new DMFs' are expected to be filed in 2001-2002.

These factories will be increasingly used for exports to regulated markets. Sun Pharmaceuticals was looking for an additional bulk manufacturing capacity to address the requirements of the domestic and non-regulated markets. And this is where Pradeep Drugs fits in.

Sun Pharmaceuticals has a number of interesting new processes in its research pipeline awaiting scale up. In order to ensure confidentiality, the company prefers to introduce these products in a facility that it owns.

"During the course of this year, we have launched 43 products and many more are in the pipeline," says Mr. Dadha proudly.

The company is ranked fifth by prescription sales in the domestic market with a clear leadership position in therapy areas of psychiatry, neurology, cardiology, gastroenterology. Formulation sales account for about 67 per cent of the turnover. The company's specialty prescription products and bulk drugs are marketed in 26 countries.  

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