Dr Reddy's clarifies on reports of Bain approach for Cipla bid, here's what they said

Dr Reddy's Laboratories issued a statement on Tuesday, September 5, in which they said the company does not comment on market speculations. The clarification comes in response to a report in the Economic Times, which said that Bain Capital had approached the Hyderabad-based drugmaker to team up for a bid to acquire a stake in India's fourth-largest drug manufacturer.

"Currently, there is no such event or information, which requires a disclosure under the SEBI listing regulations," the statement from Dr Reddy's said.

Among other contenders for Cipla include Blackstone and Torrent Pharma.

Torrent Pharma has also signed a non-binding bid for the company, according to sources, and their bid is also said to be 30 percent higher than Blackstone, as per a report in the Business Standard.

Shares of Dr Reddy's Laboratories have opened 1.1 percent lower at Rs 5,589.

So, what does Cipla with a ticket size of around Rs 60,000 crore including an open offer at the current market price bring to the table for Dr Reddy's or Torrent? To start with, the company that manages to acquire Cipla will be catapulted to the top of the leaderboard in the Indian pharma space.

Torrent Pharma whose market cap is close to 40 percent lower than Cipla’s is keen on the deal as they believe both companies have a complementary portfolio when it comes to India with just about a 5 percent overlap.

Torrent would also get a larger footing in the US market where Cipla is currently 5x bigger than Torrent. Bernstein says the combined P&L will help in bolder investments biosimilars, speciality in the US and consumer health in India.

For Dr Reddy's, the market cap is just about 5 percent less than Cipla’s. While Dr Reddy's US business is close to 2x bigger than Cipla’s the India business is smaller.

Infact the India business is expected to be one of the key lures for Dr Reddy's. Currently, Cipla is ranked third, has a 5 percent market share and 20 plus brands in the Top 300 in India. Dr Reddy's has around 16 brands in the top 300, ranked 12th and 3 percent market share. A combined entity will not only help Dr Reddy's get access to Cipla’s trade generic and consumer health business but will propel Dr Reddy's to become one of the top 5 drug makers in the country a long-time aspiration for the company.