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Deal street abuzz on Torrent Pharma’s possible interest in Cipla promoter stake

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Torrent Pharmaceuticals is said to have shown interest in fellow drug maker Cipla, where reports, till date, have suggested that private equity players were keen on buying out the promoter family’s stake.

While Torrent Pharma and Cipla have not commented on the latest reports, industry insiders said this would be the first play for Cipla promoters’ stake by an industry peer. And if it does indeed go through, it would change the dynamics of the domestic pharmaceutical industry.

Domestic acquisitions

Torrent Pharma is no stranger to domestic acquisitions and has, in the recent past, pulled off several, including Elder Pharma and Unichem — both seasoned names in the domestic industry. Last year, it picked up Curatio Healthcare for ₹2,000 crore, seen to be an expensive buy. But industry-watchers say it could pay off for Torrent Pharma in the long run, as it seals its presence in the domestic pharmaceutical market and the cosmetic dermatology segment, in this case.

Cipla doyen Dr YK Hamied had recently told shareholders that reports on the family’s exit were “speculative” . However, in the absence of an outright denial, reports continue to emerge on PE bids for the same.

Effects on the Indian market

Torrent Pharma will be punching above its weight if it enters the fray for Cipla (which is double its revenues), and a bid for the entire promoter stake of 33.47 per cent would trigger an open offer and a change in management control.

While industry watchers expect Torrent Pharma to possibly make a bid, along with investor companies for the financial muscle, an industry representative observed that cobbling up resources would not be a problem from Torrent Pharma.

A buy into Cipla would give deeper access into the Indian market (with respiratory and diabetes products, for example), besides North America and South Africa — regions where Cipla is strong. But the biggest gain would be to leverage Cipla’s legacy of supplying affordable drugs, globally.

Torrent Pharma shares ended 2.13 per cent down, at ₹1,935; Cipla shares were marginally up at ₹1,230 on Wednesday.



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