No plans to exit pharma, says JB promoter-family member

“We don't want to get out of the pharma space and want to focus on what we are good at,” says JB Chemicals and Pharmaceuticals' President and Whole-time Director (Operations), Mr Pranabh Mody, when asked if the decision to sell the over-the-counter (OTC) business in Russia was the first step to a total exit.

“I am part of the (promoter) family and don't plan to retire so early,” quips the 47-year-old. “With a little more money now, we will get a little more aggressive,” he said, adding that an acquisition too could be looked at “if the “opportunity comes by”.

On Monday evening, the board of JB Chem had given its green signal to sell the Russia and CIS business to Cilag GmbH International, a wholly owned subsidiary of Johnson & Johnson for Rs 938 crore. The sale included its flagship brands Doktor Mom (Russia's second largest selling cough brand), Rinza (a leading multi-symptom cough brand in Russia) and Fitovit (a fitness product). The company's stock-price, though, ended down 13 per cent at Rs 126 on the BSE, on Tuesday.

Including the brand, trademark rights etc, the deal adds up to a total Rs 1,155 crore. The company will pay capital gains tax of 22 per cent, about Rs 206 crore on the transaction, a company official told Business Line .

‘Unlocks value'

The deal unlocks significant shareholder value, Mr Mody said, adding that the estimated Rs 870-crore company had “let off 35 per cent of its business, but got 100 per cent of its market capitalisation.”

Having decided to sell its $66 million (Rs 297 crore) OTC business, the company continues to have its $22 million (Rs 99 crore) prescription drugs business in Russia, he said, besides the India and rest-of-the-world business.

The deal is to close in a couple of months and a large section of the money is expected to come in then. It will take another three-six months for a clear picture on how the funds would be deployed, he said. The domestic market, growing at about 15 per cent, would see some revving up, he indicated. For a start, the company intends to add more ‘feet on the street'. With about 800 medical representatives, the company looks to “speed up” the momentum to match other domestic companies that have as many as 5,000 MRs.

Contract manufacturing for overseas clients is also on the agenda, not just in the competitive generic drugs space but in niche areas, he said. The company has production facilities that make lozenges and injectables.