Dr Reddy's Gains As Company Is Set To Acquire Nicotinell & Related Brands From Haleon Plc

That is on our radar is Doctor Reddy is set to buy top global nicotine therapy OTC brand Ekta joins in with more details that also the street likes with the stock up around same amount as what π industries is. Well yes, the big news for Doctor Reddy's is that they will be acquiring Nicotinell and its related brands from Haley and PLC for around £500 million. Now this is basically a nicotine replacement therapy. The total revenue of the portfolio was around £217 million in Cy 23 which compares to around £200 million in 2022 and 201,000,000 lbs in Cy 21. Valuation wise it works out to be around 2.3 times revenue and 9.2 * a bit. The key markets for them with this acquisition will be UK, Europe, Australia as well as Japan. Now for the impact in terms of this particular acquisition, the entire category. Of nicotine replacement therapy is growing at around 5 odd percent, but the acquired brands have roughly 25% market share. So the company Doctor Reddy's will get a good foothold in terms of the market and will become the second largest player in key markets. It will also enable Doctor Reddy's to gain access as a global OTC anchor brand, which is basically an over the counter anchor brand. Now the company also expects to generate around 25% EBITDA margin. But the negatives is that the acquired portfolio has been growing at less than mid single digits. So that's a key concern based on the revenue that I had highlighted, highlighted earlier. Also, the deal will exhaust around 80% of Doctor Reddy's existing net cash on books, which is a worry according to some analysts. So one will really need to see what the what the category growth will be going forward, what Doctor Reddys plan will be within this category and when other pharmaceutical companies are really diversifying into, you know, specialized assets, etcetera, they're looking at consumer healthcare. So that would be a key question to keep in mind. Ekta, thank you so much for explaining the details and the contours of the deal. Its all about acquisitions today, but time for a break. On the other side, Manisha Gupta joins in with Vipul Shah, chairman of Gem and Jewelry Sport Promotion Council. Stay tuned for that conversation.