The astounding feature of the deal is not the money. It is the fact that DRL managed to walk away with the booty even though it was not the highest bidder.
(not just the pharma fraternity) is the Dr Reddy's Laboratories (DRL) acquisition of Betapharm, the fourth-largest generic pharmaceuticals company in Germany.The news of this buyout stirred the business community. Not just because the company was bought for Euro 480 million, but also because DRL beat opponents like the Israeli Taro Pharma and Indian biggies like Ranbaxy to the deal.
The astounding feature of the deal is not the money. It is the fact that DRL managed to walk away with the booty even though it was not the highest bidder. The booty here was a stronger presence in Europe, a rich pipeline of 146 products which are already registered in Europe, a strong presence in chronic care category, strong existing relationship with key members of the marketing channel (doctors, chemists, medical salesmen and insurance companies), a strong IP regulatory infrastructure and a fast growing generic company.
The Betapharm deal is also expected to take DRL closer towards its goal of being a $1 billion company by 2008. In contrast to this, Betapharm benefits from DRL's pipeline of innovative products, high quality standards and competitive manufacturing costs. The deal was to be financed up to Euro 80 million through DRL's internal accruals and the remaining by Citibank based on the balance sheets of both the companies.
In an interview, G V Prasad, Executive Vice-Chairman and Managing Director, DRL, stated that after Betapharm, the company has three priority areas. The priorities being-scaling up the US generics business and building critical mass in the UK, accelerating the launch of dermatology business in US and lastly, to accelerate the launch of NCEs through their own sales network and various licensing agreements.
M&A is one of the most crucial decisions by a pharma company and its success lies not in investing large amounts and signing the deal but in the manner it is implemented which is a very crucial step. A successful M&A is characterised by its integration and everyone is looking forward to problem free post buyout integration. How well can this Hyderabad based company started by a scientist merges with a German generics major is a story that will soon unfold. All the eyes are still on Dr Reddy's.
