InvestorQ : How will Torrent Pharma buying Curatio be beneficial for both the businesses?
Chandralekha Desai made post

How will Torrent Pharma buying Curatio be beneficial for both the businesses?

NISHA Nayak answered.
2 months ago

Gujarat based Torrent Pharmaceuticals plans to buy 100% stake in Curatio Healthcare for Rs2,000 crore. The enterprise valuation of Curatio comes to around Rs1,885 crore, since it already has cash and cash equivalents to the tune of Rs115 crore on its books. In terms of business focus, Curatio is a leader in the cosmetic dermatology segment. This is considered to be one of the high growth and high margin segments in the pharma space with a big market in a country that is seeing a rise in purchasing, becoming more conscious about appearance and willing to invest on scientifically proven methodologies. It sure fits in.

Torrent gets the advantage of an existing and well accepted presence in the cosmetic dermatology space and is able to increase its presence in the dermatology segment with a high quality differentiated portfolio. In addition, Torrent Pharma has the added benefit of inheriting a field force of more than 600 medical representatives (MRs) apart from a readymade distribution network of more than 900 stockists. Curatio has a portfolio that spans over 50 brands and marketed by its own internal team across India.

What would be the financial synergies. This may still be too early because if you look at the top line sales of Curatio Pharma for FY22, it is quite small at Rs224 crore. Considering that Torrent Pharm ais almost 40 times that size with annual sales of Rs8,500 crore, the boost to the top line would be quite minimal. However, the profit and niche leadership contribution would be much more significant for Torrent Pharma. However, the deal would take about a month to be complete and would be subject to both parties meeting certain set preconditions and necessary regulatory approvals falling in place.

What are the synergies for both the companies in the merger? Torrent Pharma gets to enhance its presence in the cosmetic dermatology segment with strong brands having loyalty and market share. This is the lucrative cosmetic and paediatric dermatology segments, where Torrent gets to boost its presence. For Curatio, the deal offers a more stable partner with a much bigger balance sheet and spending power. Torrent can virtually bankroll its future growth plans. Torrent Pharma has leadership in the Cardiovascular (CV), Gastro Intestinal (GI) and in the Vitamins Minerals Nutritional (VMN) segment.