Dr Reddy''s acquires 45% stake in American Remedies
26 Nov 1999
The promoters of the Rs 92-crore American Remedies Ltd have sold their 45 per cent stake in the company to Dr Reddy’s Laboratories for a consideration of Rs 175 per share. The deal was brokered by DSP Merrill Lynch and has been approved by Dr Reddy’s board of directors. (1 crore = 10 million)
Dr Reddy’s will acquire a further 15-20 per cent stake from the associates of American Remedies'' promoters, and then go on to make a public offer for the purchase of an additional 20 per cent of the company''s equity under the Securities and Exchange Board of India takeover code, says an official Dr Reddy''s release. American Remedies went public in September 1995.
The acquisition will push Dr Reddy’s Laboratories to the fifth rank in the domestic formulations market, the release adds. Following the acquisition, the company will touch sales of Rs 350 crore in the year ending March 2000. American Remedies has a strong prescription base of over 1 lakh specialist doctors. (10 lakh = 1 million)
The two companies operate in distinct therapeutic categories and complement each other very well. American Remedies has a strong presence in multivitamins, plain multivitamins, general nutrients and antifungals, while Dr Reddy’s operates in antiulcerants, antirheumatic non-steroidals, fluoroquinolones, calcium antagonists and haemostyptics.
"The American Remedies acquisition is an excellent value creation opportunity for Dr Reddy’s Laboratories given their strong marketing thrust and innovative product portfolio. We will be able to reap significant synergy gains by co-promoting their nutraceuticals with our mainline products," says Anji Reddy, chairman of Dr Reddy’s Laboratories.
According to IMS Health moving annual turnover estimates (Oct 98 to Sep 99), American Remedies is ranked 52nd in India with sales of Rs 86.6 crore. The company has a 0.6 per cent share of the domestic formulations market and is growing at the rate of 11.9 per cent.
Becozinc is the leading brand of American Remedies with sales of Rs 12.4 crore. The brand, accounting for 14.3 per cent of the company''s total sales, has had negative growth rate of 6.3 per cent. The company''s other leading brands are Bio-E (Rs 12 crore), GLA (Rs 6.5 crore), Gris-OD (Rs 6.4 crore) and Antoxid (Rs 5.8 crore). Antoxid is the brand leader in the antioxidant therapeutic segment. Together, the top five brands constitute 50 per cent of total sales.
For more details on American Remedies brands and therapeutic classes, .
Chennai-based American Remedies Ltd was started in 1985 and was promoted by four professionals. The company was seen as a potential takeover target after pharma majors such as Nicholas Piramal, Sun Pharmaceuticals, Ranbaxy Laboratories and RPG Life Sciences reportedly lined up their deals.
"The tie-up with Dr Reddy’s is a unique opportunity for American Remedies to respond to the challenges in the new marketplace. While we are well recognised for our marketing strengths, access to new products will help our salespeople leverage their strong relationships with a specialist prescriber base. We feel most comfortable with Dr Reddy’s given the shared organisational culture and practices," says R K Ramanathan, director of American Remedies.