Ahmedabad: Announcing its second overseas acquisition this year, the Rs1800-crore Zydus Cadila has signed an agreement to acquire 100-per cent stake in Quimica e Farmaceutica Nikkho do Brasil Ltda (Nikkho), a mid-sized, privately held company in Brazil. Brazil is the largest Latin American pharma market estimated at $8 billion.

The acquisition is being made through Zydus Healthcare Brasil Limitada, the step-down wholly owned subsidiary of Cadila Healthcare Ltd.

Headquartered in Rio de Janeiro, Nikkho is a growing and profitable pharmaceutical company with a manufacturing facility and caters exclusively to the Brazilian prescription drugs market.

Nikkho currently markets 22 products under 13 different brands. It also has nearly 50 registered brands, which are yet to be launched. The over four-decades old company posted sales of $26 million for the calendar year 2006. The consideration paid represents sales multiple of around one.

Zydus Cadila, which had set up its Brazilian subsidiary in 2002, has already registered 13 products, which are being marketed as generics. The acquisition will boost Zydus'' existing generic business in Brazil by providing enhanced reach and distribution, apart from strengthening its position in the branded generics business in Brazil.

Nikkho''s product basket comprises therapies across a wide range of therapeutic segments such as general medicine, paediatrics, gynaecology, neurology, gastroenterology, otolaryngology, respiratory, dermatology, and others.

"We have been looking at acquisitions that can add value to operations in our key, focussed markets; the Brazilian market is reasonably large and is growing rapidly," said Pankaj R Patel, chairman and managing director, Zydus Cadila.

"With Nikkho, we gain a company with a heritage — it stands for high quality therapeutic products and has a strong equity with the doctors. This gives us an opportunity to build our presence further in a growth-driven environment. We now see ourselves adding value to our global expansion strategy by successfully penetrating the branded generics market in Brazil," Patel added.

Moreover, Nikkho''s ready manufacturing facility will benefit Zydus in the long term as the changing regulatory landscape in Brazil could make it mandatory for pharma companies to have a manufacturing base in the country. With Zydus Cadila already having its own QC lab in Brazil, the acquisition makes the company''s operations a full-fledged one.

Previous acquisitions by Zydus include Recon Healthcare in 2000, German Remedies Ltd., a listed MNC in 2001, Banyan Chemicals Ltd., a company with an USFDA approved API plant in 2002, Alpharma France, the French affiliate of one of the world''s largest generic companies in 2003, Liva Healthcare a mid-sized derma player in India and Nippon Universal Pharmaceuticals Ltd. of Japan, in 2007.