Lupin Pharmaceuticals has made no secret of its intention to grow through acquisitions at home and abroad and last week announced it would make a major buy of Russian generic drug maker ZAO Biocom, placing it in a turbulent but fast-growing market.
|Lupin CEO Vinita Gupta|
The purchase of a 100% stake in the firm, with terms and price details not disclosed, will be the company's first step into Russia's pharmaceutical market which has sales of RUB765 billion ($13.6 billion) in 2014, according to a press release that cited figures from IMS Health.
Russia and India have had deep diplomatic and commercial ties through defense and other dealings for decades, whereas Western companies face the hurdles of sanctions over Russia's annexation of the Crimea from the Ukraine.
In May, Lupin said it has aggressive plans to go out and buy the sales it needs to please investors. It planned to do so by acquiring enough other companies to add $1 billion to its sales revenues and make Lupin a $5 billion drugmaker within three years.
Lupin, again citing IMS Health, said in the past decade Russia's pharmaceutical market recorded double digit growth, which is expected to continue and place it in the Top 8 pharmaceutical markets in the world by 2018.
In December last year, Abbott Laboratories ($ABT) closed its purchase of Russia's VeroPharm, a generics maker as well, for RUB16.7 billion ($305 million) from billionaire Roman Avdeev in a deal that CEO Miles White said was a bit of a cliffhanger, according to the second quarter earnings call.
"And we made a fairly significant move in Russia that got done during the core of the whole Ukraine issue, which was a--again, Murphy's Law: if you believe that if it can go wrong, it will. Boy, everything aligned badly and we still got that deal done," White said on the April 22 call. "Fortunately we did it in rubles, so it didn't hurt us when the ruble collapsed. So, that was really good strategically."
For Lupin, the purchase is also expected to open up avenues into Eastern Europe.
"We are excited about our entry into the Russian market through Biocom," said Vinita Gupta, CEO.
"Russia is an attractive market and this acquisition will also enable our expansion into neighboring markets as well as other Eastern European markets in the future."
- here's the Lupin release