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Nirmal Bang Report
Sanofi India Ltd. has divested its Soframycin and Sofradex portfolio to Encube Ethicals Pvt. Ltd. for Rs 1,250 million. Annual sales of the divested portfolio stand at Rs 754 million (2.6% of total sales), valuing the deal at 1.7 times sales.
Encube Ethicals would have the right to exclusively sell and distribute these products in the territories of India and Sri Lanka.
The divestment should close in the next three months after the signing of the asset purchase agreement. We understand that the divested portfolio was a low single digit growth business and was a drag on company’s overall growth rate.
Additionally, as we understand, the active pharma ingredient used for Soframycin/Sofradex is imported and has lower margins compared to other domestic products in Sanofi India’s portfolio.
The divestment should allow Sanofi India to grow faster with improved margins.
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