Aurobindo Pharma is set to acquire Senor Organics - a small-sized pharma company based in Hyderabad.

Director of Aurobindo Pharma, Lanka Srinivas informs that Senor Organics has been acquired for its reasonable infrastructure and useful infrastructure. The company also plans to disinvest the entire shareholding in its subsidiary Aurobindo Tongling in China.

Excerpts from CNBC - TV18’s exclusive interview with Lanka Srinivas:

Q: Take us through the synergies of your acquisition.

 A: Senor Organics is a pretty small company with some useful products and a reasonable infrastructure. We have acquired it since is adjacent to one of our unit called Unit 8 in Hyderabad. Unit 8 is a US FDA approved facility and we want an infrastructural growth around that unit.

Q: Is this a cash deal – how much did it cost?

 A: Yes, it’s a cash deal, we are not disclosing the amount.

Q: Can you tell us how many times it is to FY06 sales at least?

A: Generally we are trying to do less than one time.

Q: Does this come out of your kitty - we believe you had a kitty of about USD 250-300 million to pursue acquisitions in Europe and to some extent in US?

A: This is a small venture; we actually do not need to touch that one. We will be using that kitty for lot of European and US acquisitions.

Q: What kinds of acquisitions we can expect – what’s on the horizon in the next six months?

A: Milpharm, a UK based formulation business is growing by 30-40%. A few months ago we bought a facility at Dayton in New Jersey, US and paid close to about USD 20 million for it. That’s getting ready and perhaps by next Q1 it should be in production for the market place.

Importantly, that we are looking at certain acquisition candidates in the European market space, since it has several countries where one needs marketing platforms for success.

I think Aurobindo has filed about more than 25 dossiers in the Europe, which we have to take to the market place. So obviously we need certain market platforms, so that we can leverage this strength very effectively.

Q: Are you looking for one large acquisition or are you looking for several small acquisitions of about USD 30-50 million?

A: We are not looking for a large acquisition since it means that we are buying their product portfolio. We don’t need their product portfolio or their manufacturing infrastructure. What we need is a basic level of distribution and marketing platform where we can take our products. We are looking at acquisitions like Milpharm - about USD 20 million or so.

Q: One final call on Penicillin G prices - what is the outlook? It has been declining, where do you see it stopping?

A: Penicillin G prices used to be around USD 5.5 per unit some time back but of late the growth in prices have been more than 50%, they are somewhere around 8.28-8.3 these days and people expect that there is going to be a significant ramp up in these prices in the near future.