Thursday, July 31, 2008

March of the pharma sector

It seems that lately there is a lot of movement in the Pharma sector with growing interest from Japanese companies. Takeda and Torrent seems like a good alliance. Here's the article from TOI today.

31 Jul 2008, 0049 hrs IST,

AHMEDABAD: Japan's largest and oldest pharma giant Takeda Pharmaceutical Company is keenly eyeing Ahmedabad-based Torrent Pharmaceuticals as a possible acquisition.

The inspiration may have come from Daiichi Sankyo's $4.6 billion acquisition of Ranbaxy Laboratories.

Sources close to the development said the $13.75 billion Takeda had evinced keen interest in acquiring the Mehta-promoted Torrent group's Rs 1,336-crore-turnover pharmaceutical business.

"Talks between Takeda and Torrent have reached the price negotiation stage. In fact, Takeda chairman Kunio Takeda had long meetings with the Mehtas in a Mumbai hotel last week," a source close to the deal said.

Torrent is looking for a valuation of close to Rs 400 per share. Incidentally, Torrent's negotiations with Sun Pharma, before Takeda came into the picture, are understood to have fallen through as Sun Pharma could offer up to Rs 300 per share, which was much below Torrent's expectations. Both Sun and Torrent had denied being in acquisition talks.

Takeda, which has a presence in 90 countries and manufacturing facilities in Japan, Italy, Ireland, China and Indonesia, was eyeing Torrent as it would give it ready access to the lucrative Indian market and provide a low-cost manufacturing base to cater to global markets.

Interestingly, what also perhaps makes Torrent a synergistic fit is that like Takeda, Torrent is also an R&D-focused pharma company having a strong presence in therapeutic segments like cardio-vascular, diabetes, gastro-intestinal and anti-hypertensive.

Torrent first shot into the global limelight when it made a bold bid to acquire Merck's global generic pharma business last year. Having failed in that bid, there is now realisation among the promoters that they need to raise capital for a massive expansion in the power sector.

Market buzz has it that the Mehta brothers — Sudhir and Samir — have already chalked out ambitious expansion plans of hitting a 10,000MW power generation capacity in three years from the existing 1600MW. Torrent Power is in electricity distribution in Ahmedabad and Surat, and has already established fuel linkages with the Mukesh Ambani-controlled Reliance Industries Ltd.

A Torrent spokesperson, however, denied the development saying: "There is no move on the part of the promoters of Torrent Pharma or its management to sell stake, in part or in whole, to any players, national or global."

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