Sanofi’s search for high-growth consumer brands in India led to the firm’s Aug. 24 acquisition of Universal Medicare Pvt. Ltd.’s nutraceutical business.

Sanofi will gain well-known Indian brands like fish oil supplement Seacod, women’s vitamin brand Folwise, anti-oxidant Selace Forte and about 40 branded mineral supplements and other formulations in therapeutic segments including osteoporosis, vision, skin and cardiac care, nerve health and pain management.

The boards of both companies approved the transaction, which is expected to close in the fourth quarter. Sanofi will gain rights to market and distribute the acquired brands while manufacturing will stay with Mumbai-based Universal.

Universal’s acquired businesses had sales of about $24 million (1.1 billion Indian rupees) for the 12 months ended in February, according to Sanofi, which did not disclose the terms of the deal.

A Mumbai investment banker with knowledge of the details said the transaction was closed at around seven to eight times sales, or roughly $200 million. He said GlaxoSmithKline Consumer Healthcare also likely bid for Universal, but could have lost the race to Sanofi due to a late submission of its proposal.

Sanofi said roughly 750 Universal commercial employees will transition to Aventis Pharma Ltd., which is listed on the Indian stock exchanges with 60.4% of equity capital held by Sanofi and its wholly owned subsidiary Hoechst GmbH.

“With this acquisition, Aventis Pharma will advance its sustainable growth strategy in India and facilitate the creation of a consumer healthcare and wellness platform. This move is also synergetic with the growth strategy of Sanofi,” the company said in a statement.

The deal “reflects the necessity of growth in the nutraceuticals business via acquisitions, as brands are the toughest to build in a country like India,” said Ajit Mahadevan, partner and head of Ernst & Young's life sciences practice.

Large Potential Attracts Big Players

Mahadevan said a number of pharmaceutical firms consider India’s nutraceuticals market promising, and the market is underpenetrated.

“With a stronger presence, a well-oiled distribution network and the ability to strengthen brand value further, Sanofi will be able to realize reasonable returns from the products,” said the consultant, who formerly worked with Piramal Healthcare Ltd.

A 2009 Ernst & Young paper reported India accounted for less than 1% of the $117 billion global nutraceuticals market. At present, the Indian market stands at $1 billion and is growing at 18%, double the rate seen in other markets. By 2013, the global market is estimated to reach $177 billion.

Deal Deluge In OTC, Nutraceuticals Space

Sanofi Asia-Pacific Business Development VP Arjun Oberoi in May said the company is making efforts to acquire OTC brands in India, looking to continue its OTC success in other markets in the region – Australia, China, the Philippines and Thailand (Also see "Sanofi-Aventis APAC Business Development VP Arjun Oberoi On Innovation Pacts And Deal-Making In Asia: An Interview With PharmAsia News (Part 2 of 2)" - Scrip, 4 May, 2011.).

Aventis Pharma Managing Director and Sanofi South Asia VP Shailesh Ayyangar in 2010 said Sanofi was among the most aggressive players in India in medical education and awareness-building.

The company is participating in India’s Prayas project, which aims to bridge the diagnosis-treatment gap to rural doctors.

Sanofi’s Universal acquisition is the latest of several recent deals in India’s OTC sector. Earlier this month, French food giant Group Danone bought Wockhardt Ltd.’s nutrition business for $354 million (Also see "Danone Buys Wockhardt's Nutrition Brands That Abbott Won Then Lost" - Pink Sheet, 8 August, 2011.).

In December, Reckitt Benckiser outbid rivals and paid $742 million to acquire strong brands from Paras Pharmaceuticals Ltd. (Also see "Reckitt Continues Asian Push With $724M Paras Purchase" - Pink Sheet, 20 December, 2010.).

A common aspect among the recent agreements, according to a stock market analyst, is they have been for seven- to eight-times sales premiums, a shade less than the nine-times sales Abbott Laboratories Ltd. paid in May 2010 for Piramal Healthcare Ltd.’s prescription products in India (Also see "Nepentes Buy Continues Sanofi Consumer Product Acquisition March" - Pink Sheet, 24 May, 2010.).

[Editor's note: This article appears courtesy of PharmAsiaNews.com, Elsevier Business Intelligence's source for Asian biotech and pharmaceutical news. Register for a 30-day risk free trial.]

By Vikas Dandekar

Sanofi Enters India’s Consumer Market With Universal Medicare Buy

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