Unichem Labs Rejects Approaches From Overseas Rival Drugmakers, B&K Says

Unichem Laboratories Ltd., an Indian drugmaker whose shares have doubled in the past year, rejected several approaches by overseas pharmaceutical companies, Batlivala & Karani Securities India Pvt. said.

Unichem, based in Mumbai, is receiving increasing interest from “several” multinational companies producing branded and generic medicines for collaboration, the brokerage said in a report on the pharmaceutical industry today. Tie-ups may be announced in one to two months, B&K said. Unichem Chairman and Managing Director Prakash Mody declined to comment.

Mergers and acquisitions will increase in India as drugmakers seek new sources of revenue growth in emerging markets, B&K said. India’s pharmaceutical market will expand at least 13 percent annually over the next five years, helped by increased spending on health care and rising rates of heart disease, diabetes and cancer, according to the report.

“Several large MNCs have approached Unichem for stake sale, but management is not keen to sell,” B&K analysts Rohit Bhat, Sudarshan Padmanabhan and Gaurav Chugh wrote in the report. “They expect revenues to comfortably grow at 15-18 percent” annually for the next three to five years, the analysts wrote.

Unichem fell 2 percent to close at 458.9 rupees in Mumbai trading today, valuing the company at $356 million. The stock has climbed 108 percent since June 16 last year.

B&K rates Unichem “outperform” with a price target of 482 rupees a share.

To contact the reporter on this story: Jason Gale in Singapore at j.gale@bloomberg.net.

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