Torrent Pharma set to acquire Curatio

Mumbai: Ahmedabad-based Torrent Pharmaceuticals is set to acquire Curatio Healthcare, a manufacturer of skincare products. The deal will value Curatio at ₹2,100 crore, said people aware of the development.

The transaction will see the exit of existing investors of Curatio, such as ChrysCapital (which holds a 20% stake) and Sequoia Capital (33%). Promoters, including GK Ramani, and the management will also be exiting the company.

The deal is expected to be signed in the next two week, the people said. Torrent Pharma and KKR-controlled JB Chemicals were the final contenders to acquire Chennai-based Curatio, ET first reported on April 11.

Spokespeople for ChrysCapital, Sequoia and Ramani declined to comment, while an email sent to Torrent did not elicit any response till press time Wednesday.

Edelweiss Financial Services and Mape Advisory are the advisers for the transaction.

Half a dozen pharmaceutical majors - Aurobindo, Biocon, Dr Reddy's, JB Chemicals, Torrent Pharma and Zydus Healthcare - had been shortlisted in the second round for the acquisition of Curatio, as per a March 7 ET report.

ChrysCap had acquired the stake from Fulcrum Venture India in a deal worth ₹130 crore in 2018. Sequoia had invested about ₹100 crore in Curation in 2014.

Curatio was set up in 2005 by a team of former executives of American Remedies, including K Ramanathan and Ramani, after their company was merged with Dr Reddy's in 1999. As an early-stage investor, Fulcrum had acquired a majority stake in Curatio in 2005. Curatio posted revenue of ₹240 crore in fiscal 2022 with an operating profit of ₹60 crore. The company has a projection of ₹300 crore revenue and ₹90 crore operating profit for the current fiscal year, said one of the people cited above.

Curatio operates through a network of more than 700 distributors, reaching to over 6,000 doctors across India, focusing on dermatologists, paediatricians and gynaecologists. Its top selling brand is the Tedibar baby soap.

The skincare products market in India was valued at ₹13,000 crore in 2020, growing at a compound annual rate of 11%.

Torrent Pharma, with annual revenue of ₹8,500 crore, is the flagship company of the Torrent Group. The group has revenue of more than Rs 20,000 crore. Torrent Pharma is ranked eighth in the Indian pharmaceuticals market and is among the Top 5 in the therapeutics segments of cardiovascular, gastrointestinal, central nervous system and vitamins minerals nutritionals.

Torrent Pharma has been an aggressive buyer in the domestic pharmaceutical market. It acquired the domestic branded business of Unichem in 2017 for about ₹3,600 crore, Elder Pharma's local formulations business for ₹2,004 crore and Zyg Pharma, a manufacturer of dermatological formulations which was part of the Encore Group, in 2015. In 2017, Torrent acquired Regestrone and Pregachieve, which are brands in the female healthcare segment, from Novartis for ₹400 crore. In May 2022, Torrent bought four brands from Dr Reddy's.

Torrent Pharma's revenue growth across key branded generic markets has been healthy and is likely to sustain. Further price hikes in the branded generic business and cost optimisation steps have aided margins. Torrent's high exposure to branded generic business (70% of total revenues) and chronic therapies provides comfort. Going ahead, timely resolution of plants will boost revenue growth in the US and benefit operating leverage, said Param Desai of Prabhudas Lilladher in a recent report.