Torrent to buy Elder's branded formulation biz for Rs 2,000 cr

In a major deal, Torrent Pharmaceuticals agreed to acquire the branded formulation business of Elder Pharmaceuticals in India and Nepal for Rs 2,000 crore to boost its presence in segments such as women's healthcare and pain management.

Elder has a portfolio of 30 brands in India, including some market leaders in wound care, neutraceuticals, women's healthcare and pain management.

"The transaction is a strategic fit for Torrent and will strengthen our core prescription-based business," Torrent Group Chairman Sudhir Mehta said in a statement.

"This acquisition strengthens our position in the women healthcare, pain management and vitamins-nutrition segments by enhancing and accelerating market access," he added.

The deal is also expected to enable cost and revenue synergies in Torrent's domestic formulations business, he said. The Ahmedabad-based firm will fund the acquisition through internal accruals and bank debt.

Torrent Pharma shares fell 4.04 per cent to Rs 479.50 at the close on the BSE. Elder Pharmaceuticals dropped 8.17 per cent to Rs 298.30.

The deal with Torrent addresses Elder's recent challenges and will help the company de-leverage its balance sheet, Elder Managing Director and CEO Alok Saxena said.

"We will now focus and grow our in-licensing, anti-infectives and exports business," he added.

The transaction, which was approved by the boards of both companies, is subject to shareholder and regulatory approvals and is expected to close in the first half of 2014.

The deal also involves the transfer of Elder's domestic business employees to Torrent. Elder will continue to make and supply products at its existing facilities for Torrent for three years.

Torrent Pharma, with a turnover of over Rs 3,200 crore, produces formulations and bulk drugs at plants at Indrad, Baddi and Sikkim.

Elder Pharmaceuticals, which has brands such as Shelcal, Eldervit and Formic, has six manufacturing facilities for formulations and active pharmaceutical ingredients.