Sumary of Lyka Labs acquisition by Ipca Laboratories could open strong growth opportunities:
- Acquisition synergy The management of Ipca sees the formulations segment as one of the key growth drivers, with the domestic market providing the lion’s share.
- This acquisition is expected to provide Ipca inroads into the lyophilized injectables business in India and rest of the world, which is the key area of operation for Lyka Labs, added Sharekhan.
- “The acquisition will help the management’s plans to enter into the new international market for new product lines providing wider market access”, said Manoj Dalmia, founder and director of Proficient Equities Limited.
- Ipca Labs does not have any direct business in lyophilized injectables, also known as freeze-dried injectables, a process in which water is removed from a product that is then frozen and placed under vacuum to increase shelf life of perishable products, enabling ease of transport.
- Lyka Labs, which has manufacturing facility in Ankleshwar, Gujarat, is also expected to gain from Ipca’s marketing expertise in the branded generic formulations business in Southeast Asia, Middle East, Africa and Latin America where it does not have a presence.
- Ipca Laboratories has a strong presence in exports markets, which constitute 52 percent of its revenue.
- Financial snapshot Lyka Labs reported an after-tax loss of Rs 55.4 crore and Rs 14.5 crore in financial years 2020 and 2021, respectively.
- In the six months ended September 30, 2021, Lyka Labs reported an after-tax profit of Rs 49.5 crore on revenue of Rs 109.9 crore.