Aurobindo Pharma Limited is looking at Eastern Europe as a priority market for inorganic growth as it seeks to further expand its European operations, which came as a strong insurance in the face of headwinds from the US market in the form of steep price erosion.
"We always actively pursue M&A opportunities for the purpose of market penetration and for new product platforms. When it comes to geographical preference Eastern Europe is more attractive in terms of priority," N Govinda Rajan said in response to a question during the analysts call yesterday.
The company's acquisition-led strategy has paid off in Europe, which now accounts for 25 per cent of Aurobindo's revenues and growing in double digits even at a time US sales stayed flat despite launching more number of new products.
The look out for acquisition opportunities in the Eastern Europe comes close on the heals of the completion of euro 135 million acquisition of Generis Pharmaceutica by its wholly-owned subsidiary Agile Pharma in Portugal. Generis acquisition has given a leadership position in the local market besides expanding its product basket in Europe to 271 products.
The acquired Actavis business has also been improving in profitability, according to the company. Aurobindo has transferred almost 50 per cent products of Actavis' acquired business to its Indian sites which are dedicated for European market for the purpose of cost saving.
Last year the Hyderabad-based company had entered a race to buy Teva Pharmaceutical's European business, though its Indian rival Intas won the bid by agreeing to pay a hefty $764 million. In the light of recent reports about Aurobindo's interest in a much larger acquisition, the management maintained that it would be interested in highly value-based buying and it would not do any thing exotic.
The Generis acquisition was funded through foreign currency loans and this has taken the total debt to little over $600 million. As the company has targeted to bring down this debt to $470 million by the end of March, 2018 it is unlikely that the company would be taking any big bets at this juncture, according to the analysts.