The country's largest pharmaceutical company, Ranbaxy Laboratories, is well into an acquisition spree overseas, and has added another big buy to its bag with the purchase of South Africa's fifth largest generic drug maker, Be-Tabs Pharmaceuticals (Pty) Ltd, for $70 million. That tops seven companies across the globe that the Delhi-based company has already bought for a total of more than $450 to 470 million since January this year.
Ranbaxy's biggest buyout yet has been that of Romania-based Terapia, which was sealed for $324 million.
"Ranbaxy is continuously looking for inorganic growth in the overseas markets,” Malvinder Singh, Ranbaxy's chief executive officer, told Hindustan Times on Friday. The purchase strengthen's Ranbaxy's hold over South Africa, where Be-Tabs is the nation's largest pencillin maker.
The acquisition of Be-Tabs is subject to requisite approvals from South Africa’s Competition Council Authority and is expected to be completed in the first quarter of 2007.
BE Tabs, with current sales of around $30 million, is among the most established companies in South Africa. “Be-Tabs is a significant acquisition in a market that is large and growing with high entry barriers," Singh said.
Be Tabs has a strong over-the-counter (OTC) drug portfolio with significant brand recognition that can be leveraged by Ranbaxy with wholesalers, pharmacists and consumers.
The transaction will be funded by from foreign currency convertible bonds (FCCBs) and is valued at 2.2 times of sales and 7.7 times of EBITDA (earnings before interest, taxation, depreciation and amortisation) multiples.
“The acquisition of Be-Tabs’ results in considerable synergies and further strengthens Ranbaxy’s foothold in South Africa. It reinforces our position by expanding our portfolio in a key market that is exhibiting strong growth potential. The move will help us to provide effective disease management solutions in support of the government’s objective to make healthcare affordable to a wider cross-section of the population,” said Singh.
South Africa is the largest pharma market in Africa, valued at close to $2 billion, with a high potential for generic product growth.
Dr Rashid Bhikha, Chairman Be-Tabs, said: "Ranbaxy’s stature as a global generic pharma player brings further credibility to Be-Tabs' 30-year-old rich heritage in South Africa and will take it to its next phase of growth."