Eris does another acquisition in derma space, this time valuations paid were quite high (5.5x sales). Call notes below.
16.03.2023
- Acquired 9 cosmetic dermatology brands from Dr. Reddy for 275 cr. (50 cr. primary sales; 5.5x sales; 78-80% gross margins). Higher valuation was paid because growth is higher in cosmetology (15-20%)
- Will be financed through borrowings (8-8.5% variable rate loan). 6 brands in top-5 with 3 brands in top-3. 3 brands have 10 cr.+ annual sales
- Debt will be 850 cr. in FY23, net debt to EBITDA will be 1-1.5x in FY23
- Used string of pearls strategy to build dermatology portfolio targeting portfolio gaps. Now time is to consolidate
- Adding 40-50 MRs to dermatology field force to promote cosmetic dermatology (existing field force is 640 in Oaknet). Cosmetic dermatology is growing faster than medical dermatology
- Eris will rank #3 (7% market share) in covered market in dermatology (Eris now covers 45% of dermatology market), have spent 1265 cr. in building dermatology portfolio. Aggregated revenue is expected to exceed 400 cr. in FY24
- FY24 guidance for Oaknet: 400 cr. revenues at 36-38% EBITDA margins; 5 lakh PCPM
- Contribution from emerging therapies (dermatology + CNS + women’s health) has increased to 28% (from 12%)
- Third party manufacturing is 15-20% for the entire company
Disclosure: Invested (position size here, no transactions in last-30 days)