JB Chemicals has successfully completed the acquisition of a comprehensive portfolio of approximately 15 ophthalmology drugs from the renowned pharmaceutical giant Novartis, amounting to ₹964 crore or $116 million. The acquisition, scheduled to take effect in January 2027, signifies a strategic move by JB Chemicals into the thriving Indian ophthalmology sector.
In preparation for this pivotal development, JB Chemicals will initiate the process by remitting ₹125 crore to Novartis, securing exclusive licensing rights for the specified drug portfolio within the Indian market.
Over the next three years, under the terms of the in-licensing agreement, Novartis will maintain the manufacturing responsibilities for the drugs, while JB Chemicals will assume the mantle of marketing and selling these pharmaceutical products. This acquisition marks JB Chemicals' fifth strategic move within the Indian market in the last two years, underscoring the company's commitment to establishing a prominent presence in the rapidly expanding Indian ophthalmology sector.
The Indian ophthalmology market has demonstrated robust growth, boasting a 15% Compound Annual Growth Rate (CAGR) from October 2021 to October 2023, reaching ₹4,374 crore. This growth surpasses the overall Indian pharmaceutical market, which experienced a 9% increase during the same period, reaching ₹2.1 lakh crore.
Key drivers behind the flourishing ophthalmology market include a substantial patient pool, estimated at 6 million blind individuals, an anticipated 6-8% year-on-year growth in cataract surgeries (compared to the historical 2-3%), and advancements in infrastructure and diagnostic capabilities.
JB Chemicals' acquisition of Novartis' ophthalmology portfolio encompasses a range of drugs, including anti-infective, anti-allergy, and glaucoma medications. Notably, eight out of ten of these drugs have achieved an impressive 10-20% three-year CAGR. With 52% of its sales originating from the domestic market, JB Chemicals now gains access to five leading brands in their respective categories, including the anti-infective Vigamox, pain medication Nevanac, and glaucoma treatment Simbrinza. Additionally, four other brands, such as Vigadexa for conjunctivitis and anti-allergy drug Pataday, hold positions among the top three in their respective categories.
The acquired portfolio has consistently demonstrated growth over the past three years, escalating from ₹179.3 crore in September 2021 to ₹198.4 crore in September 2022 and ₹207.8 crore in September 2023. Noteworthy milestones include the potential for portfolio sales to reach ₹300 crore within the next three to four years and an anticipated improvement in gross margins, estimated to rise from 15-20% during the initial three years of in-licensing to approximately 65-70% post-acquisition.
This significant acquisition, representing JB Chemicals' largest investment in the past two years, follows previous strategic acquisitions totaling ₹1,286 crore. Analysts express optimism, citing JB Chemicals' ability to generate substantial free cash annually from its operations, with operating cash flows reaching ₹421 crore as of the first half of this fiscal year.
It is noteworthy that JB Chemicals, while expanding its portfolio through strategic acquisitions, contrasts with Novartis, which appears to be streamlining its portfolio by divesting certain assets. Over the past two years, JB Chemicals acquired Sanzyme's probiotic portfolio, pediatric brands from Dr Reddy's, and Novartis entered into a sales and distribution agreement with Dr Reddy's for a portfolio of pain management and women's health drugs. Novartis also executed the sale of the cardiac brand Azmarda to JB Chemicals in April 2022 for ₹246 crore and divested another cardiac brand, Cidmus, to Dr Reddy's for ₹456 crore.
JB Chemicals Stock Price: This strategic acquisition signifies JB Chemicals' fifth move into the Indian market in the last two years, marking the company's entrance into the burgeoning Indian ophthalmology sector. This move underscores JB Chemicals' commitment to strategically position itself within the dynamic landscape of the Indian pharmaceutical market.