Torrent On Course For Acquisition, US Momentum
This article was originally published in PharmAsia News
Executive Summary
Torrent Pharmaceuticals may have opted out of the race for the injectables firm Gland Pharma, but the Indian company stays interested in a buy to build its "hospital presence".
At an investor call post the fourth quarter results, Torrent Pharmaceuticals Ltd.'s top brass underscored the need to diversify, in the medium term, beyond oral solids and noted that a hospital presence could help make the business "stronger and more sustainable" in the long run.
"We are working actively on building our hospital presence. But the current large divestment, which is taking place in India…Torrent is not part of that anymore. So we are not currently pursuing any large injectable acquisition in India, but we remain interested in the hospital space," Sanjay Gupta, executive director (international business), Torrent, said in response to an analyst's query.
Gupta made no specific reference to Gland Pharma Ltd., but Torrent was earlier said to be interested in the Hyderabad-based firm. Gland has been on the block for some time now with a clutch of suitors including Baxter International Inc. and private equity investors, Advent International, and more recently China's Fosun International Ltd. eying the company (Also see "Fosun Pitches For India’s Gland" - Scrip, 17 May, 2016.).
The Torrent official maintained that the company's "sweet spot" for acquisitions was in the $300-600m range, but added that his organization's "strength and finances" would allow it to target larger acquisitions.
"We can even realistically bring about a much larger acquisition."
Torrent had earlier this year received shareholder approval to raise INR105bn ($1.6bn) through the issue of shares and certain other securities to finance its growth plans. It had then explained that, among others, the enabling approvals would help the company take quick and effective action to capitalize on inorganic growth opportunities, as and when available.
US Growth
Torrent, which reported a strong set of numbers for the fourth quarter and year ended March 2016, also hopes to keep the momentum going in the US market, with an estimated 10 launches anticipated there in the next fiscal.
Torrent's top brass said that the company has "everything in place" to have a sustainable business of about "half a billion dollars" in the US in the course of the next two-three years. The company is on track to file 15-20 ANDAs in the current fiscal year.
The company reported revenues of INR14.99bn (+30%) and net profits of INR3.57bn (+175%) for the fourth quarter. For the year ended March 2016 revenues stood at INR66.76bn (+43%), with net profits at INR17.22bn (+129%). The strong showing was led by generic versions of aripiprazole and esomeprazole in the US; the firm's Brazilian business declined 17% during the year.
The company indicated that during the year it had gained from the "relatively higher prices" prevailing in the aripiprazole market place in the US, though prices in the last quarter were "much lower" than previous quarters and as more players enter prices would go down further.
The US FDA had in April last year cleared the first set of generic versions of Otsuka Pharmaceutical Co. Ltd.'s schizophrenia and bipolar disorder drug Abilify (aripiprazole) including those from Torrent and Alembic Pharmaceuticals Ltd.
Nimish Mehta, founder of Research Delta Advisors, told PharmAsia News’s sister publication Scrip Intelligence that he expects Torrent's US sales to shrink to around $330m in fiscal 2017 from close to $400m in FY16, as generic Abilify numbers diminish. But he expects the decline to be offset, to some extent, by sales of generic Detrol LA (tolterodine) and the full year impact of generic Nexium (esomeprazole).
Product Supplies
Torrent's top brass also referred to some part of sales decline in key products in the US being offset by the start of commercial sales to the US from its Dahej facility in India.
"Dahej started shipping products and we received three product approvals from Dahej from April of 2016. And by the end of the year, we should be close to about 10 product approvals from Dahej that would compensate and allow us to increase some volumes," the company's top brass explained.
In March this year, Torrent announced that it had received an Establishment Inspection Report (EIR) from the US FDA for its Dahej plant. An EIR is a final inspection report issued by the FDA when no enforcement action is contemplated, or after enforcement action is concluded.
Torrent's senior executives, though, referred to "minor" observations at the firm's Indrad site inspected by the FDA in May and some analysts attributed the fall in Torrent's stock in early trade on March 24 to this. "I would say they are product-specific [observations]," Torrent's Gupta said in response to a query on the Indrad site at the post results call.
(This story also appears in Scrip Intelligence
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