“Wait for some time,” a senior official of Aurobindo told Business Standard, in response to a query regarding Bloomberg report that the company was among the entities to consider bids for Teva Pharmaceutical Industries’ portfolio of drugs in Britain, Ireland and Iceland. He wouldn’t elaborate.
The Bloomberg report also said, quoting an unnamed source, that Aurobindo would finance the deal with a loan of more than $1 billion. No final decision had been made, and the company could still decide against a bid, the same sources told the news agency. Earlier this year, Teva won a conditional European Commission approval for taking over Irish company Allergan, after allaying regulators’ concerns with concessions, including sale of “the great majority” of the subsidiary's United Kingdom and Irish business.
Last year, Teva signed an agreement to acquire Allergan’s generics Actavis business for $40 billion, while agreeing to sell the overlapping products to comply with anti-monopoly laws in the United States and Europe.
Earlier, in June, Dr Reddy’s Laboratories announced the acquisition of eight such Abbreviated New Drug Applications (ANDAs) from Teva for $350 million. Cadilla Healthcare acquired two ANDAs.
In the race for buying Teva’s European products on offer are big names like Maylan NV and Novartis AG, among others, according to the earlier reports. Incidentally, Maylan has resisted an earlier bid for acquisition by Teva. Private equity companies, including Apollo Global Management LLC and Cinven, are also weighing bids for the business, which could fetch $1.5-2 bn, Bloomberg said, quoting people in the know.
Aurobindo's European formulations business is 22 per cent of its total revenue. It is said to be betting on the European Commission’s preference for a strategic buyer with experience in the European generics market.
In 2015-16, Aurobindo’s revenue was Rs 3,130 crore from the formulations business in Europe, 28 per cent of the total formulations business of Rs 11,166 crore. Together with the Active Pharma Ingredient business, the company's top line was Rs 13,896 crore. Europe was its second biggest market after the US for formulations.
The company got the highest number of product approvals from the US Food and Drug Administration last year. It has set a target of $3 bn revenue by 2017-18.
In May, managing director N Govindarajan told analysts he would not rule out capital raising for strategic purposes. Late last year, the company had decided to seek shareholder approval for an enabling resolution to raise up to $600 million.
Gross debt at end-March was Rs 4,708 crore. However, the company has a cash balance of Rs 840 crore, bringing down the net debt to a marginally lower level than the previous year. The company raised loans in the recent past to fund the acquisition of US-based nutraceutical company Natrol and Actavis' loss-making commercial operations in Europe.