is taking the acquisition and product in-licensing route to consolidate its business in Africa, the company’s second-largest market after India.
Africa contributed 22 per cent to Cipla’s consolidated revenue in 2017-18. Also, Ebitda margin in South Africa is higher than the company’s consolidated margin of 18.6 per cent in 2017-18.
The company is looking at inorganic growth opportunities to offset delays in product approvals and decline in the institutional tender business.
Last week acquired Mirren, a South African over-the-counter (OTC) manufacturer and distributor for Rs 2.28 billion.
The acquisition adds cold, flu and pain relief brands to Cipla’s kitty, and is the second acquisition in South Africa in two years and fourth in the market since 2013. also gets a manufacturing plant as a part of the transaction.
“We believe Mirren will be a rewarding asset. Over the last three years, the company’s revenue has seen a 20 per cent compounded annual growth rate (CAGR). We were not present in the cold and flu segment in South Africa. It is fast growing, sticky and importantly, not subject to price volatility,” according to Kedar Upadhye, global chief financial officer, Cipla. The company is the fourth-largest generic drug maker in South Africa.
As part of its growth strategy, Cipla is also looking at acquisitions and product in-licensing. Its Africa portfolio includes central nervous system, respiratory and HIV  Acquisition and partnerships will give the company access to other growing therapies, including and hypertension.
Upadhye said the company was evaluating various opportunities for inorganic growth. He, however, refused comment on the potential deal size and therapies.
Cipla

The company’s main focus markets include South Africa, East Africa (Uganda, Kenya, Tanzania). It also has a large institutional tender business, global access, consisting of anti-malarial and HIV 

In Uganda, the company is looking to partner with the government to increase access to treatment for local population.
Uganda has around 800,000 cases, but only four per cent of the patients have access to treatment. In Kenya and Tanzania, it has put in place a direct-to-market model in place of a distributor model for higher growth.
Africa market contributed $522 million to Cipla’s revenue in 2017-18. While in the South Africa business, margins are higher, institutional tenders is a low-margin business.
The tender business is under stress and beside Cipla, companies, including Ajanta Pharmaceuticals, Aurobindo, Ipca Labs and Strides Shasun, have seen their revenues decline from the segment.
While in 2016-17, the global access business contributed $145 million, it was $110 million in 2017-18, down 24 per cent. The decline was largely due to phasing out of tenders and funding issues.
Multinational pharma like Novartis and Teva, too, are re-setting their pharma businesses. While Novartis is looking to sell its generic business in the US, Teva is implementing a $3-billion cost-saving plan.