The Hindu Business Line : Zydus Cadila acquires Japan's Nippon Universal

Ahmedabad April 19 Ahmedabad-based Cadila Healthcare Ltd (Zydus Cadila) announced on Thursday the acquisition of Nippon Universal Pharmaceuticals Ltd, thereby strengthening its base in Japan — the world's second-largest pharma market.

Zydus said it has acquired 100 per cent stake in the Tokyo-headquartered, privately-held companybut declined to disclose the acquisition price "at this point of time". Dr Ganesh Nayak, Executive Director (Global Business), signed the deal on behalf of Zydus Cadila with Nippon in Tokyo on Thursday.

Meanwhile, sources told Business Line that the company is in the process of finalising more deals abroad and fresh announcements are expected in the next few weeks.

Generics potential

The Japanese generics market valued at $3 billion has a tremendous growth potential as it currently stands at just 5 per cent of the total pharma market in Japan in value terms and 17 per cent by volume. The acquisition will provide critical access to a ready manufacturing and marketing base as well as a strong distribution reach. Nippon reaches out countrywide to more than 4,000 hospitals and clinics. This is expected to provide a fillip to the group's operations in a market that is highly complex and dominated by local pharma companies.

Zydus, which had set up Zydus Pharma Inc in 2006 to spearhead its foray into Japan's generics market, will now be able to jumpstart its operations. Nippon provides the group an opportunity to establish itself in Japan's rapidly evolving generics space. Zydus will be looking to leverage Nippon's strong relationship of three decades with key wholesalers, the company said.

The group has identified a new product development programme to feed at least five to six products each year to its portfolio and build a basket of 40-50 products over the next three to four years. Moreover, Zydus will acquire new Marketing Authorisation (MA) to cut short on development time and also explore in-licensing agreements with other generic companies. With an expanded portfolio, the group will also seek to expand its field force to cover new areas and customers in the medium term.

Regulated market

Mr Pankaj Patel, Chairman-cum-Managing Director, said companies looking to consolidate their presence in this highly regulated market, with high expectations in terms of quality and consistency in supplies, have found the acquisition route the most ideal one.

"We had announced our intentions of being a long-term player in this market when we set up our subsidiary last year. Going forward, I believe this acquisition will unlock value for us as the generic market in Japan is just opening up and, post-2010, we expect this market to be a major growth driver for global business."

This marks Zydus Cadila's second overseas acquisition, the first being Alpharma France in 2003. With a turnover of more than Rs 1,800 crore, Zydus Cadila is a global healthcare provider and amongst the leading healthcare groups in India. On a path of accelerated growth, the group has been expanding its operations through both organic and inorganic routes. Starting with the acquisition of Recon healthcare in 2000, it also acquired German Remedies Ltd (2001) and Banyan Chemicals (2002). Most recently, the group made a foray into the Rs 1,500 crore derma market in India with the acquisition of the Mumbai-based Liva Healthcare. With over 6,000 employees, Zydus has business operations in more than 40 countries worldwide.

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