Zydus buys Asta stake in German Remedies

In what is described as the "largest-ever M&A transaction in the Indianpharmaceutical sector," the country's sixth leading drugmaker Zydus Cadila, through its subsidiary Recon Heathcare, has signed a definitive agreement to acquire a combined 27.72% stake from Asta Medica and Heller Vermogensverwaltungs in German Remedies. The price of this acquisition, reports India Infoline, is 1.49 billion rupees ($31.9 million).

The move brings to an end the speculation that has surrounded the future of German Remedies, since Asta (itself for sale by parent Degussa; see also page 5) made it clear that its stake in the company could be acquired. Among suggested contenders in the past have been the US firms Bristol-Myers Squibb and Pharmacia, which had declared an interest in expanding their presence on the Indian pharmaceutical market, and India's Nicholas Piramal and Ranbaxy (Marketletter April 2).

At the same time, Zydus has entered into an agreement with Asta to acquire perpetual rights to five brands, Deriphyllin, Paractol, Ildamen and Beta Xipamid, which had estimated sales of 427 million rupees in the year ended March 31. The leading product in this range is the respiratory drug Deriphyllin, sales of which were around 400 million rupees in past 12 months, and the license for this extends to 63 countries. Recon will finance the acquisition through a 558 million rupee equity injection by Zydus and 2 billion rupees debt, and Zydus will make an open offer to acquire a further 20% stake from public shareholders.