UCB to Sell Indian Established Brands Portfolio to Dr. Reddy's - Analyst Blog

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UCB S.A.UCBJF announced that it will sell its established brands business in India, which includes the franchises in the areas of allergies and respiratory disorders, to Dr. Reddy's Laboratories Ltd. RDY .

Terms of the Deal

The transaction will be valued at INR 8 billion (approximately €118 million). In 2014, this business generated revenues of approximately INR 1.5 billion.

Under this agreement, nearly 350 staff will be transferred from UCB to Dr. Reddy's. The transaction is expected to close in the first quarter of the financial year 2015-2016.

Benefits for UCB and Dr. Reddy's

UCB said that it has decided to sell its established brands business in India to Dr. Reddy's in order to focus on its core business in the country. UCB, which has a robust neurology portfolio, is currently making further efforts to achieve a strong growth path through constant focus on its core products and promising pipeline. The company believes that Dr. Reddy's, being a leading player in India with sufficient knowledge of the local market, excellent reputation and the highest quality standards, is the right company for transferring its established brands portfolio and its employees.

Apart from UCB, Dr. Reddy's also stands to benefit from the transaction. With the acquisition of UCB's established brands business, Dr. Reddy's will gain the opportunity to expand its footprint into the fast growing areas of dermatology, respiratory and pediatrics products. The addition of leading brands including Atarax, Nootropil, Zyrtec, Xyzal, and Xyzal M to its portfolio should accelerate its growth trajectory.

2015 Outlook Unchanged

UCB stated that this transaction will not alter its outlook for 2015. As mentioned at the time of announcing its full-year 2014 results, UCB continues to expect revenues in the range of €3.55 billion − €3.65 billion. Core earnings per share are expected in the band of €1.90 - €2.05. The company expects the top line to be driven by the combined sales of Cimzia, Vimpat and Neupro.

UCB holds a Zacks Rank #5 (Sell). Some better-ranked stocks in the health care sector are Lannett Company, Inc. LCI and Cytokinetics, Incorporated CYTK . Both carry a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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