Biocon's Shaw looks at acquisitions

Biocon Ltd is going to focus on acquisitions abroad purely for strategic reasons in either intellectual property assets or for marketing and distribution. Speaking to ET.com, Kiran Mazumdar-Shaw, CMD of Biocon, specified that for her company, the M&As will essentially be based on a strategic reason. She pointed out that Indian companies had different reasons for acquiring a global company, but said very few companies today are doing it simply for expanding the footprint.

Shaw agreed that M&A is the new hallmark of Indian multinationals and the one sector that is positioned to grow globally is the pharma sector.

Overseas acquisitions by Indian pharma companies in the 2005-2007 period has been to the tune of $2000 million. Shaw said: “For instance, this year, Biocon acquired a company in the US for reasons other than expanding the footprint. It was an IP company and we had to negotiate a lot, but it was important to pay the right price for the buy-out.

Biocon has acquired all intellectual property assets of its bankrupt US research partner Nobex Corporation early this year. The IP acquisition, unprecedented among Indian companies, has cost Biocon $5 million, including the final bid amount of $4.1 million, royalties and creditor settlements in what could be called a not hotly contested bid.

She said, "This was truly a strategic acquisition which provided us with an immensely valuable IP platform. It also gave us full ownership of our ongoing oral insulin and oral BNP programmes.” She added, “We propose to leverage these proprietary assets through a combination of licensing and co-development partnerships."

Shaw also said that pharma is really big on the M&A scene, but agreed that Dr Reddy’s and Ranbaxy are really driving the trend. However, she said, “Biocon is emerging as a key player in the generic market.”

Commenting on the acquisitions by the Indian corporations, she agreed that M&As are the new hallmark of Indian multinationals. The one sector that is positioned to grow further globally using this approach is the pharma sector.

She said Biocon started as a manufacturer and exporter of enzymes. The company gradually shifted focus to a life-science driven generic company with fermentation technology. Biocon is again going through a transition phase from being a generic company to a discovery led life science company. Statins sales to the US and Europe would be a major growth driver in the short term.