Mumbai: Binish Chudgar, vice-chairman and managing director of Intas Pharmaceuticals Ltd, speaks in a phone interview about the purchase of Actavis UK Ltd and Actavis Ireland Ltd from Israel-based generic drug maker Teva Pharmaceutical Industries Ltd.
At a time when pharma companies are queuing up to buy assets in the US, what was the rationale behind picking up assets in the UK which are supposed to be low-margin?
This company is exceptional. It is one of the best performing companies in UK and Ireland. Their margins are quite high. It is not a distressed asset. Our intention is not to buy a loss-making unit and turn it around. It takes time to reach this position and we would like to be No.1 or 2 in certain markets. With this deal, we will be becoming the No.1 or 2 in UK and Ireland. There is good management attached to it. Also, our own existing business can get the benefit of this strong management.
How have you financed the acquisition?
We have created long-term debt to fund the acquisition. The balance sheet is strong enough for us to borrow around another $1 billion. We are generating a lot of cash, so in another three to four years, the way we are working, we will be debt-free. So it’s not a big concern.
Our net-worth-to-debt is around 1x, we can go to around 3x to 4x, so it is not an issue at all. Also, right now in the market scenario, interest level globally is very low, if you are talking in pound terms. And there is enough margin in this business. So effective interest cost is low, so it is not a big risk.
Was there an aggressive bidding for the asset?
I would not like to comment on other bidders. The fact is that such assets don’t come in the market too often. Price is not the only criteria. Its an integration of two companies. We have around 250 people in Europe, here we will be taking up to 400 people. It’s not just the price, the strategy is more important.