PFIZER ARM TO BUY RFCL’S VETERINARY FIRM FOR $75M

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PFIZER is all set to acquire RFCL’s animal healthcare division from ICICI Ventures, in a deal estimated to be about $75 million (today approximately Rs 375 crore), according to people familiar with the development.

ICICI Ventures has announced that it had signed a definitive agreement to sell RFCL’s (erstwhile Ranbaxy Fine Chemicals) Vetnex Animal Health to Pfizer’s animal healthcare outfit, Pfizer Animal Health. However, I-Ventures, a private equity arm of ICICI, did not disclose the terms of the agreement, including the deal size citing confidentiality reasons. It said Pfizer was expected to complete the acquisition by August 2009.

ICICI Ventures bought RFCL from Ranbaxy in December 2005. RFCL was Ranbaxy’s fine chemicals, diagnostics and animal healthcare business, which was renamed RFCL in December 2006. Apart from the animal healthcare division, it also had Diagnova (diagnostics) and Rankem (fine chemicals). The animal healthcare division was demerged into Vetnex earlier this year and was on the block since then.

According to Sushil Mehta, MD of RFCL, “Today’s announcement reinforces our strategy of enhancing capabilities for all of our three businesses as we build on our leadership position in the Indian marketplace.”

RFCL’s animal health unit Vetnex is believed to have an annualised revenue in the region of Rs 120 crore. Vetnex, which has a presence in poultry, livestock and companion pet healthcare verticals, acquired Chennaibased Alved Pharma & Foods in 2008, to scale up its business. Vetnex is believed to be the third-largest player in the Rs 1,400-crore domestic animal health market, which is growing annually at 10%. Scaling up business, both in terms of market penetration and size, remains a challenge for the segment, making acquisitions is preferred way to grow.

Vishakha Mulye, MD and CEO of ICICI Venture said: “The RFCL buyout involved the divestiture of a non-core business of a large corporate along with participation from the management team of the business.”

Pfizer has been exploring opportunities to bolster its animal health business, estimated to be less than Rs 100 crore. The pharma company is also believed to be looking at acquiring Wockhardt’s animal healthcare business.

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