MUMBAI: New Delhi-based Morepen LaboratoriesBSE 8.27 % is in talks with Ajay Piramal Group to sell its OTC (over-the-counter) business of market leading brands such as Burnol as it plans to monetise some of its mainstream brands when larger rivals look to expand their consumer product portfolio.
Morepen has mandated Deloitte Touche Tohmatsu to run a formal process and negotiations are at an advanced stage, sources told ET.
“We have received interest from several contenders including some of the large buyout funds and strategic players. However, talks with Piramal Group have advanced quite a bit. We hope to conclude the transaction within the next couple of months,” said one of the sources.
Piramal Enterprises, controlled by billionaire Ajay Piramal, has been a buyer in branded OTC product segment. In May, the company acquired four brands from US drug maker Pfizer for Rs 110 crore, its third such acquisition in nine months.
The company had in December 2015 acquired five OTC products of MSD Pharmaceuticals in the pain relief category for Rs 95 crore. A month earlier, it bought the brand Little, which sells various baby accessories across India.
Founded in 1985, Morepen has a wide range of front-ranking presence in the wellness category. Its spectrum of popular OTC products, such as Burnol, Lemolate and Sat Isabgol are leading brands in the respective categories.
When contacted, Piramal Group declined to comment, while Morepen did not immediately respond to an email seeking comments till the time of going to the press.
Burnol and Lemolate excelled in the OTC segment with a growth of 80 per cent and 57 per cent respectively in their first quarterly sales in FY 2016-17. Total sales from OTC products went up by 61 per cent at Rs 11.92 crore in Q1 FY 2016-17 vis-a-vis Rs 7.40 crore in Q1 FY 2015-16, its website showed.
Larger Indian companies such as Piramals and Dr Reddy’s Laboratories are acquiring OTC brands in India and abroad to strengthen their presence.
“Our aim is to be a significant player in every business under the healthcare vertical of Piramal Enterprises Limited,” said Nandini Piramal, executive director, Piramal Enterprises, while acquiring Pfizer brands in December.
“The consumer products division of the company currently ranks 7th in India, but we aim to be a top three player in the OTC market by 2020. Acquisition is one of the important routes to help us achieve our goal,” she said.
Meanwhile, Dr Reddy’s acquired six OTC consumer healthcare brands from US drugmaker Ducere Pharma in May. Though estimates vary, OTC drugs are seen as a high growth segment. Its size has swelled to about $3 billion in 2015.
Large drug makers like Sun Pharma, Dr. Reddy’s and Cipla have given a substantial push to their OTC products in the last two years.
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