The promoters of the Rs 92-crore American Remedies Ltd have sold their 45
per cent stake in the company to Dr Reddys Laboratories for a consideration of Rs
175 per share. The deal was brokered by DSP Merrill Lynch and has been approved by Dr
Reddys board of directors. (1 crore = 10 million)
Dr Reddys will acquire a further 15-20 per cent stake from the
associates of American Remedies'' promoters, and then go on to make a public offer for the
purchase of an additional 20 per cent of the company''s equity under the Securities and
Exchange Board of India takeover code, says an official Dr Reddy''s release. American
Remedies went public in September 1995.
The acquisition will push Dr Reddys Laboratories to the fifth
rank in the domestic formulations market, the release adds. Following the acquisition, the
company will touch sales of Rs 350 crore in the year ending March 2000. American Remedies
has a strong prescription base of over 1 lakh specialist doctors. (10
lakh = 1 million)
The two companies operate in distinct therapeutic categories and
complement each other very well. American Remedies has a strong presence in multivitamins,
plain multivitamins, general nutrients and antifungals, while Dr Reddys operates in
antiulcerants, antirheumatic non-steroidals, fluoroquinolones, calcium antagonists and
"The American Remedies acquisition is an excellent value creation
opportunity for Dr Reddys Laboratories given their strong marketing thrust and
innovative product portfolio. We will be able to reap significant synergy gains by
co-promoting their nutraceuticals with our mainline products," says Anji Reddy,
chairman of Dr Reddys Laboratories.
According to IMS Health moving annual turnover estimates (Oct 98 to Sep
99), American Remedies is ranked 52nd in India with sales of Rs 86.6 crore. The company
has a 0.6 per cent share of the domestic formulations market and is growing at the rate of
11.9 per cent.
Becozinc is the leading brand of American Remedies with sales of Rs
12.4 crore. The brand, accounting for 14.3 per cent of the company''s total sales, has had
negative growth rate of 6.3 per cent. The company''s other leading brands are Bio-E (Rs 12
crore), GLA (Rs 6.5 crore), Gris-OD (Rs 6.4 crore) and Antoxid (Rs 5.8 crore). Antoxid is
the brand leader in the antioxidant therapeutic segment. Together, the top five brands
constitute 50 per cent of total sales.
For more details on American Remedies brands and therapeutic classes, .
Chennai-based American Remedies Ltd was started in 1985 and was
promoted by four professionals. The company was seen as a potential takeover target after
pharma majors such as Nicholas Piramal, Sun Pharmaceuticals, Ranbaxy Laboratories and RPG
Life Sciences reportedly lined up their deals.
"The tie-up with Dr Reddys is a unique opportunity for
American Remedies to respond to the challenges in the new marketplace. While we are well
recognised for our marketing strengths, access to new products will help our salespeople
leverage their strong relationships with a specialist prescriber base. We feel most
comfortable with Dr Reddys given the shared organisational culture and
practices," says R K Ramanathan, director of American Remedies.