Europe now blips prominently on the radar of some Indian pharma companies.

A case in point is the latest acquisition of Canadian drug-maker Apotex’s businesses in five key European markets by the Hyderabad-based Aurobindo Pharma.

Last week, it announced the deal to acquire Apotex’s business in Poland, the Czech Republic, the Netherlands, Spain and Belgium for €74 million.

While analysts forecast margins to increase about 10 per cent over three years due to increased market access, the acquisition is also seen as EPS — accretive over the next one year.

European presence

The present headwinds in the US market in the form of escalation in pricing pressures and tough regulatory stance could make margins slim to Indian generic players in the long term.

While the lion’s share of US generics still goes from India and is expected to be so in the near future, it may be a matter of time before European markets increase their share significantly in total revenues.

In the year ended March 31, 2018, Aurobindo posted 9 per cent increase in revenues at ₹16,500 crore driven by healthy growth in European markets.

Europe Formulations revenues clocked ₹4,354 crore, an increase of 32.9 per cent over the last year.

On a constant currency basis, EU revenues grew by 29 per cent.

For the fourth quarter, Europe Formulations revenues clocked ₹1,152 crore, registering a growth of 48 per cent YoY.

Going by the last three acquisitions of the Hyderabad-based Aurobindo in Europe, it appears that greater market access and new technology/product platforms have been the drivers for acquisitions.

Lower generic penetration in Italy, Spain, Portugal and France offer growth potential.

In 2017, it acquired Portugal’s Generis Farmaceutica SA from Magnum Capital Partners for €135 million (around ₹969 crore).

In 2014, it acquired Actavis’s commercial operations in seven western European countries. Dr Reddy’s Laboratories too, has been further expanding its presence in Europe. It is now expecting to increase sales in Germany (with the easing of the regulatory issues it faced earlier) and Romania.

Last year, it augmented European operations with the launch of a slew of generics in France in the area of oncology and anti-infectives, including antimycotics. Its hospital portfolio is now present in Italy and Spain too.

The company recently said it was working on generating higher revenues from these countries, and to increase market presence in Europe.

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