Sun Pharma to Acquire 85% of Russian Firm Biosintez for $24 Million

Mumbai: Sun Pharmaceutical Industries Ltd has signed definitive agreements to acquire an 85.1% stake in the Russian company JSC Biosintez for $24 million. This acquisition aims to bolster Sun Pharma's presence in Russia through local manufacturing capabilities.

As part of this deal, Sun Pharma will also assume approximately $36 million in debt from JSC Biosintez, according to a company statement filed with the stock exchange.

JSC Biosintez, a company that specializes in the hospital segment, reported $52 million in revenue in 2015. It operates a manufacturing facility in the Penza region, producing a wide range of dosage forms, including injectables, blood substitutes, blood preservatives, ampoules, tablets, ointments, creams, gels, suppositories, and active pharmaceutical ingredients.

"This acquisition aligns with Sun Pharma’s strategy to invest in strategic emerging markets. This transaction provides us with local manufacturing capabilities across multiple dosage forms in Russia, enabling us to better serve the Russian pharmaceutical market," said Aalok Shanghvi, head of emerging markets at Sun Pharma.

"This is a relatively small acquisition for Sun Pharma. However, having local manufacturing capacity will enhance the company's presence in Russia and help meet future regulatory requirements in that market. Russia is a large but challenging market, particularly due to significant currency fluctuations," noted Ranjit Kapadia, Senior Vice President at Centrum Broking.

According to US-based healthcare information provider IMS Health, the Russian pharmaceutical market recorded sales of $10 billion in the twelve months ending September 2016.

The transaction is expected to be completed by the end of 2016, pending approval from the Russian Federal Anti-Monopoly Service and other closing conditions, Sun Pharma stated in the filing.

Russia is part of Sun Pharma’s emerging markets business. While the company does not disclose country-specific details, total revenue from emerging markets was $548 million in 2015-16, a 10% decline from the previous year, primarily due to adverse currency movements.