The share price of this top Indian pharmaceuticals firm gained by 3 percent to an Intraday high of Rs 6,250.00 per share on Thursday after the company announced the acquisition of Nicotinell and other related brands.
With a market capitalization of Rs 1,03,398 crores, the shares of Dr Reddy’s Laboratories Ltd went up by 3 percent and were trading at Rs 6,203.30 a piece on Thursday’s afternoon session. Also the today’s high price of the stock is Rs 6,250.00 a piece and the previous closing price of the stock is Rs 6,068.45 a piece.
What happened: According to Dr Reddy Labaroteries stock exchange filings, they announced that the wholly-owned subsidiary of its firm namely ‘ Dr. Reddy’s Laboratories Switzerland (SA)’ has entered into an agreement with Haleon Group to acquire Nicotinell a leading Nicotine Replacement Therapy (NRT) brand.
The filings also mention that Dr. Reddy’s Laboratories SA will also acquire all shares of other related brands such as Northstar Switzerland SARL, a Haleon group company which is also based in Switzerland.
This deal includes the acquisition of all intellectual property, business contracts, documents, and other assets. The assets will be managed by Northstar Switzerland and its subsidiaries which are North Star OpCo Limited (UK), and North Star Sweden AB.
Nicotinell generated net revenues of approximately GBP 217 million in the year 2023. Northstar Switzerland is newly incorporated so the turnover of this company is said to be nil. The Industry to which Nicotinell is Consumer healthcare, as per Dr Reddy’s Laboratories filings.
Why it Matters: NRT, recommended by the World Health Organization for nicotine use disorders, will give Dr. Reddy complete access to a global Over-the-Counter (OTC) brand helping in the expansion of its global consumer OTC business. The acquisition is said to close by the early fourth quarter of 2024, as per the filings.
Nicotinell is the second biggest brand globally (excluding the United States) in the NRT category. NRT is recommended by the ‘World Health Organization Model List of Essential Medicines for nicotine use disorders.
Dr. Reddy’s Laboratories SA will pay Great Britain Pound (GBP) 458 million upfront in cash to acquire Nicotinell and related brands. Additionally, there will be extra payments of up to GBP 42 million in the upcoming year 2025 and 2026, based on how well the acquired company performs after the acquisition. The deal also includes acquiring all shares of other related brands such as Northstar Switzerland and its subsidiaries.
Finances: Reviewing the financials of Dr. Reddy’s Laboratories on a year-on-year basis, the revenues rose by 14 percent from Rs 24,670 crores in FY23 to Rs 28,011 crores in FY24. In the same time frame, the net profits increased from Rs 4,507 crores to Rs 5,578 crores demonstrating a 24 percent increase.
Ratios: In terms of return ratios for the year 2024, it has reported a return on equity (ROE) of 19.74 percent and a return on capital employed (ROCE ) of 25.13 percent . It has also reported a gross profit margin of 31.51 percent in the same year.
Share price movements: The shares of Dr. Reddy’s Laboratories have generated a return of 24 percent over the past year and 9 percent for the past 6 months.
Shareholding pattern: As of March 2024, the firm’s shareholding pattern stood at 26.65 percent for promoters, 10.55 percent for the public, 44.49 percent for foreign institutional investors, and 18.31 percent for domestic institutional investors.
About the company: Dr. Reddy’s Laboratories Ltd is a top Indian pharmaceutical company that provides a range of products and services. These include Active Pharmaceutical Ingredients (APIs), Custom Pharmaceutical Services (CPS), generics, biosimilars, and specialized formulations. The company was incorporated in the year 1984.
Written By Zahal.
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