Shares of Cipla gained over 2% in opening trade on Tuesday after the drug major announced that its subsidiary has inked a deal to acquire South Africa-based Actor Pharma. The pharma heavyweight has witnessed a strong rally in the last five months, thanks to better-than-expected June quarter earnings and promoter stake sale buzz.
Snapping two sessions losing streak, Cipla shares opened higher at ₹1,255.90, up 1.4% against the previous closing price of ₹1,255.90 on the BSE. The pharma heavyweight gained as much as 2.1% to ₹1,265, while the market capitalisation rose to ₹1.02 lakh crore. The stock has risen 48% in the last five months after touching its 52-week low of ₹852 on March 22, 2023. It hit a 52-week high of ₹1,277.55 on August 10, 2023.
In a post market hour exchange filing on Monday, Cipla said that its subsidiary, Cipla South Africa, signed a binding term sheet with Actor Holdings to acquire 100% of the issued ordinary shares of Actor Pharma. The company said that this strategic acquisition will unlock the future growth opportunities and leverage cost synergies in the South African market.
“This development underpins Cipla’s commitment and investment in its over the counter (OTC) business and supports its journey to be a leading healthcare player in South Africa,” Cipla said in the filing.
The transaction is expected to close in the next three to four months, subject to the negotiation and signing of the definitive transaction agreements (which are expected to be concluded imminently) as well as receiving regulatory approval from South Africa’s Competition Commission. The company, however, didn’t reveal the financial transaction involved in the deal.
Formed in 2009, Actor has quickly grown to become the 5th largest, privately owned, OTC player in the South African private market. It specialises in OTC and generic medicine and has established strong consumer brands, and identified niche prescription markets in categories of women’s health, nasal, cough & cold and baby & child. In addition, the company has an exciting and innovative pipeline and in its last financial year (FY23) delivered revenue of 234 million South African rand, on the back of strong double-digit growth.
Umang Vohra, Global MD & CEO, Cipla said, “This is in line with our strategy of strengthening our OTC and wellness portfolio. We believe this is an excellent opportunity to leverage our existing marketing capabilities, unlock future growth opportunities and optimise the performance of our pipeline.”
For April-June quarter of FY24, Cipla reported net profit of ₹996 crore that grew 45.1% year-on-year (YoY) as compared to ₹686 crore in the same period last year. The total income from operations climbed 17.7% to ₹6,329 crore as against 5,375 crore in Q1FY23. The EBITDA stood at ₹1,494 crore in Q1FY24, up 30.7% from 1,143 crore in the corresponding period last year. The EBITDA margin improved by 2.3 percentage points to 23.6% from 21.3% in the year ago period.
During the quarter under review, the company invested ₹349 crore, or 5.5 % of sales, in R&D, higher by 27% YoY driven by continued progress of clinical trials on key pipeline assets and other developmental efforts.
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