Drugmaker Cipla on Monday announced that it would acquire a 51% stake in a pharmaceuticals' manufacturing and distribution business in Yemen for $21 million.
India's fifth largest pharmaceutical company in terms of revenue said in a filing on BSE, "Cipla has signed a definitive agreement to acquire a 51% stake in a pharmaceuticals' manufacturing and distribution business in Yemen."
Though Cipla did not disclose the name of the company in which it is acquiring the majority stake, it only disclosed that the target firm is currently owned by a UAE based parent company, it said.
"Cipla will pay $21 million for this transaction, with additional considerations to be paid over the next three years on achievement of agreed milestones," it further said in the release.
Cipla also said that it already enjoys a leading position in Yemen with over 200 products and given the recent preference to local manufacturing, this secures the company's presence in a fast growing market. The closure of the transaction, however, is subject to completion of certain conditions, it added.
Yusuf K Hamied-promoted Cipla is currently on an acquisition mode. Last year, it completed acquisition of South Africa-based Cipla Medpro for about Rs 2,707 crore. In November 2013, it gained majority stake in Uganda-based Quality Chemical Industries by acquiring an additional 14.5% stake through its wholly owned step down subsidiary Meditab Holdings for $15 million. It also acquired one of its products-distributor Croatia-based Celeris last December.
Recently, it has also acquired 60% stake in a Sri Lankan company for $14 million through its wholly owned subsidiary Cipla (Mauritius) to market its products in that country.
Cipla, one of the largest generic manufacturers in the world, is also among the major Indian pharma exporters exporting to over 170 countries.
The company's South African subsidiary Cipla Medpro was also recently been awarded a national respiratory contract worth 345 million rand (Rs 195 crore) from the South African government.
"Cipla has an excellent portfolio. Its asthma portfolio is among the best in the world. Even though the size of its recent acquisitions are not big, the company is steadily working on expanding its portfolio through acquisition. It seems the promoters are just preparing the stage for something much bigger in the future," said a pharma analyst.
Hitesh Mahida, pharma analyst, Antique Stock Broking, said, "I don't think Cipla will go for any big acquisition at present and will rather leverage on its small ticket acquisitions. It is actually acquiring companies with which it already enjoys some kind of business ties so that it can have a ready-made front-end. However, the Yemeni acquisitions looked slightly aggressive since the market may not be that big. What made them spend $21 million on this needs some clarity."