Dr. Reddy's to acquire betapharm for €480 million

By E. Janene Geiss

Philadelphia, Feb. 16 - Dr. Reddy's Laboratories announced Thursday it will buy generic pharmaceutical company betapharm GmbH for a total value of €480 million in cash.

The transaction will be funded using a combination of Dr. Reddy's internal cash reserves and committed credit facilities, according to a joint news release from Dr. Reddy's and 3i, a European private equity and venture capital investor and the current owner of betapharm.

Financial terms of the transaction will not be disclosed. The transaction is expected to close in the first week of March.

"We see our investment in betapharm as a key strategic initiative towards becoming a mid-sized global pharmaceutical company with strong presence in all key pharmaceutical markets. Betapharm has created a strong growth platform and is well positioned for the future and we are looking forward to partner with them in building a strategic presence in Europe," Anji Reddy, chairman of Dr. Reddy's Laboratories, said in the release.

Founded in 1993, betapharm is the fourth-largest generics company in Germany with a market share of 3.5%, officials said.

Betapharm markets generic drugs with focus on long-term therapy products with high prescription rates. Its current portfolio comprises about 145 marketed products.

Located in Augsburg, Germany, betapharm employs about 370 people including a sales force of about 250 with gross turnover of €164 million in 2005, officials said.

"Betapharm with its differentiated business model has all the key elements for achieving success in the fast growing generics market in Germany. We strongly believe that this strategic investment will generate substantial opportunities for long-term value creation for both the companies," G V Prasad, vice chairman and chief executive officer of Dr. Reddy's, said in the release.

Officials said the combination of the companies will enable betapharm to continue to expand its growth trajectory and provide a strong foundation to leverage Dr. Reddy's global product development and marketing infrastructure to build a significant generics business in Europe.

Rothschild acted as financial adviser and Freshfields Bruckhaus Deringer acted as external legal counsel to Dr. Reddy's in this transaction.

Dr. Reddy's is a Hyderabad, India, pharmaceutical company with proven research capabilities with a focus on diabetes, cardiovascular, anti-infectives, inflammation and cancer.

Betapharm provides generic drugs (non-patented) for indications ranging from the common cold to severe cardiovascular diseases and offers 145 active ingredients in 871 different commercial sizes and packings.

3i is a London-based private equity and venture capital firm focused on buyouts, growth capital and venture capital.

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