Intas Pharma In No Hurry To List, Says MD Binish Chudgar
Intas Pharma Acquires Teva’s UK, Ireland Assets; Sees Revenue From Europe At $300 Mn
Intas Pharmaceuticals Ltd.’s acquisition of Actavis U.K. Ltd. and Actavis Ireland Ltd. from generic drug maker Teva Pharmaceuticals Industries Ltd. will bring in synergies and put it in the league of top pharma companies in the U.K., the Ahmedabad-based drugmaker said in a telephonic interview.
On Wednesday, Intas Pharma said it will acquire assets and operations of Actavis Generics in U.K. and Ireland for 603 million pounds (about Rs 5,100 crore) through its subsidiary Accord Healthcare Ltd.
The (generics) business in the U.K. is shared by top 4 companies. We go into that league; we will be able to utilise their strengths in other parts of Europe also. In short there are lot of synergies in this field between Accord assets and Teva assets.Binish H Chudgar, MD, Intas Pharmaceuticals
The assets will include a portfolio of generic medicines and a manufacturing plant in Barnstaple, England, expanding Intas Pharma’s U.K. manufacturing presence. Earlier, the company acquired Sanofi’s facility in Northern U.K.
The divestment of certain generics assets and operations in the U.K. and Ireland was part of an undertaking that Teva made to the European Commission when it acquired Actavis Generics earlier this year.
Rationale For Acquisition
The acquisition will also help Intas Pharma utilise Teva’s strengths in other European countries and utilise the management bandwidth of Actavis, said Chudgar.
...this is a very well-managed company, so we will get the management bandwidth here. The management will help us in other areas also. So, there are two ways we are getting synergies - management bandwidth and manufacturing.Binish H Chudgar, MD, Intas Pharmaceuticals
The acquisition will help Intas Pharma become the Number 1 player in at least parts of the European market, Chudgar added. The company is the second largest generics firm in the hospitals segment company in Spain, but only the third or fourth largest player in some of the other European countries. Intas earned a revenue of $250 million in the last fiscal from Europe, and expects to reach the $600 million mark this year with the latest acquisition.
Acquisition Price
The acquired assets of Actavis operate at a margin of 29.6 percent and generated sales of 270 million pounds (about Rs 2,280 crore). At a price of 603 million pounds, this values the Intas-Actavis deal at 2.2 times sales.
Intas will fund this all-cash transaction via debt given their low leverage ratio of less than 0.40 currently. Post the debt raised to fund the acquisition, Intas Pharma’s leverage ratio will rise to 1.60.
We can easily go up to 4 (leverage ratio). For a company in the way in which we are growing, we can additionally borrow $1 billion. We are fairly comfortable.Binish H Chudgar, MD, Intas Pharmaceuticals
Intas is a Gujarat-based private unlisted company with revenue of about $1 billion. The company, backed by Temasek and ChrysCapital, derives about 65 percent of its revenue from international markets.
Growth Prospects
Intas Pharma has been growing at 20-25 percent per annum for the last 4-5 years, and the management said it can continue growing at the same rate even organically. Intas crossed the $1 billion revenue mark in the last fiscal and expects to cross sales of $1.25 billion in the current fiscal, again without any contribution from the acquisition. The company also expects to grow at 15-20 percent per annum in the domestic market, beating industry average by 300-400 basis points despite price controls.
More Acquisitions In Store?
The company continues to evaluate further acquisition opportunities in U.S. and Europe as also a manufacturing facility in India, Chudgar confirmed.
An IPO In The Offing?
Intas received private equity funding from Temasek last year, and the company has five years to offer an exit to Government of Singapore’s investment company. Chudgar indicated that the company is in no rush to launch an initial public offering.
IPO isn’t a milestone for us. We are as good as listed because we have private equities sitting, we have a board, we are complying with all the requirements like a listed company. We are generating surplus right now... In medium term, we will get listed.Binish H Chudgar, MD, Intas Pharmaceuticals
Temasek acquired 10.16 percent equity stake in the company by way of secondary purchase of shares from private equity investor ChrysCapital in November 2014.