Dr Reddy’s acquires American Remedies

American Remedies posted pre-tax profit of Rs 1.62 crore in the year March 31, 1999. Its shareholders’ equity as at this date was Rs 18.29 croreand its market capitalisation is Rs 82.45 crore.

The open offer announcement is slated for around next Wednesday. The acquisition will catapult the combine’s ranking to number five (as per ORG data) with a market share of 2.44 per cent.

DRL Chairman Dr Anji Reddy said: "The American Remedies acquisition is an excellent value creation opportunity for DRL given their strong marketing thrust and innovative product portfolio. The company has strong systems and a top class field force. We will be able to reap significant synergy gains by co-promoting their neutraceuticals with our mainline products. For instance ARL’s Antoxid brand wihch is the market leader in its category will be an excellent supplement to our own leading position in cardio therapy."

ARL brings with it key brands like Mucolite, Antoxid, BioE, Becozinc and Optisulin (which account for 60 per cent of total sales) and two facilities, one at Chennai and another at Pondicherry (both approved by Australia’s TGA).

The only worrying factor,according to an analyst with a foreign brokerage firm, is the 800-and-odd employees that come along with the deal. DRL has 2,270 employees on its rolls. Indications are that the key ARL employee structure will not be disturbed, a fact reiterated by Reddy’s statement which adds, "DRL will keep alive and promote and promote the unique character and cultute of the company and will work closely with the existing promoters to achieve this objective".

ARL managing director said the "tie-up" is an unique opportunity for ARL to respond to the challenges in the new market place. "While we are well recognised for our marketing strengths, access to new products will help our sales force leverage their strong relationships with a specialist prescriber base.