Ranbaxy eyes vaccines, biologics growth with Biovel asset acquisition

Weeks after rumors began to circulate that Ranbaxy was in talks to buy a vaccine company, the Indian pharma announced in late January that it has acquired certain assets of Biovel Life Sciences Private Ltd., a biotechnology firm focused on the manufacturing of biogenerics, biosuperiors and biopharmaceuticals based in Bangalore, India.

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GURGAON, India—Weeks after rumors began to circulate thatRanbaxy was in talks to buy a vaccine company, the Indian pharma announced inlate January that it has acquired certain assets of Biovel Life SciencesPrivate Ltd., a biotechnology firm focused on the manufacturing of biogenerics,biosuperiors and biopharmaceuticals based in Bangalore, India.

The purchase eliminates one of the challenges Ranbaxy willface as it looks to enter the growing vaccines and biologics market, that beingthe complexity involved in manufacturing these products, as the deal givesRanbaxy access to Biovel's manufacturing facility in Bangalore as well asrights to Biovel's products and pipeline.

Those products include a typhoid Vi antigen and Hibconjugate vaccines, for which Biovel has received regulatory approval for India,as well as Biovel's development pipeline, comprising a range of vaccines,biotherapeutics and other products. Financial terms of the acquisition were notdisclosed, but some analysts have speculated that the transaction was valued at$10 million to $12 million.

Although the deal size is small, Ranbaxy says it is part ofits plan to invest significantly in Indian acquisitions and strengthen itssales operations. In October, Ranbaxy Chief Financial Officer Omesh Sethi saidthe company would begin aggressively pursuing India beginning in January 2010. 

In announcing the transaction, Ranbaxy offered that in 2008,the global vaccines market was worth about $21 billion and is estimated to growat a rate of 9 percent, to reach $34 billion by 2014. The Indian vaccine marketin particular is growing annually at 10 percent, Ranbaxy said. Dr. Atul Sobti,the company's CEO, said in a statement, "With an increasing focus on preventionof disease, the importance of the vaccine market has never been greater."

"This is a high-growth potential area," says a Ranbaxyspokesperson. "The vaccines and biotherapeutics segment is an importantcomponent of our business strategy. The transaction will give Ranbaxy access toall of Biovel's products, pipeline, IP, know-how and manufacturing facility,thereby an entry into this high-growth segment."

The Biovel deal marks the second India acquisition byRanbaxy since Daiichi Sankyo bought a majority stake in the company in 2008. InMay 2009, Ranbaxy bought Delhi-based Ochoa Laboratories Ltd.'sdermatology-related and lifestyle brands. Ranbaxy also has stakes in severallocal pharmaceutical companies, including Orchid Chemicals &Pharmaceuticals Ltd., Zenotech Laboratories Ltd., Jupiter Bioscience Ltd. andKrebs Biochemicals & Industries Ltd.

Biovel did not respond to a request for comment. Thecompany, perhaps most known for its 2007 deal with Dowpharma to be the firstIndian company to make the human growth hormone, also reportedly has plans todevelop bulk or ready-dosage products in cardiology, endocrinology, oncology,dermatology and gynecology.

Biovel has been up for sale since August 2009, when thecompany underwent a management change. According to media reports, Biovel alsoconsidered possible pairings with companies like Avesthagen and Shanta Biotech.

In a statement released by Ranbaxy on the transaction,Biovel Chairman Pratap Reddy said, "We have created modern manufacturinginfrastructure and a robust product pipeline. We are sure that Ranbaxy, withits global market reach, quality and manufacturing expertise, will be able toleverage this to its full potential, and create a business of scale."

Consulting firm Gerson Lehrman Group says Ranbaxy'sacquisition addresses some of the company's current challenges, including a lackof clear focus on particular markets in recent years.

"Ranbaxy is just about finding its balance in business aftertwo to three years of wandering in the wilderness," the firm says. "Currently,Biovel's product offering is limited to very few products. Considering theregulatory challenges, the value addition is limited."

Ranjit Kapadia of HDFC Securities adds, "The deal size mightnot make a big difference for Ranbaxy on its balance sheet, but Ranbaxy gets anentry into a market which it has never explored."


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