Acquiring pharmaceutical companies in India is increasingly sensitive. Rebecca Abraham gets under the skin of Mylan’s recent acquisition of Agila Specialties

On 5 December 2013, in a US$1.6 billion transaction, Mylan, a leading US-based generics manufacturer, acquired Agila Specialties, the injectibles business of Bangalore-based Strides Arcolab.

Speaking nine months earlier, just after plans for the acquisition were announced, Strides’ founder and promoter Arun Kumar described the deal as a “compelling transaction where a compelling seller and a compelling buyer met”.

A big leap

The sale and purchase agreement signed by Mylan, Strides and the promoters of Strides, and an entity called Pronomz Ventures, on 27 February 2013, had valued Agila at 18.7 times its earnings for 2012. Although less than the 31 times earnings Abbott Laboratories paid in May 2010 for the domestic formulations business of Mumbai-based Piramal Healthcare, Kumar said this reflected a price that “clearly values the business for a scarcity value”.

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