Lupin has announced the acquisition of a Russian pharmaceutical company ZAO Biocom. Biocom manufactures generic pharmaceuticals sold largely in Russia and is also involved in contract manufacturing.

Biocom is a small company with sales of RUB 861 million (Rs 981 million, USD 15 million) in CY14. As part of the acquisition, Lupin gets a manufacturing facility in Russia and an employee base of 118 people. The company has not disclosed the amount paid for the acquisition but we estimate it paid 2-3x sales.

Commenting on the acquisition, Nomura Financial Advisory Securities opined, ''We do no not expect the acquisition to have any material impact on earnings in the near term. The acquisition is small and we consider it to have limited strategic and financial impact. We believe the market expects Lupin to make much larger acquisitions going forward. We rate Lupin Neutral and the stock is trading at P/E of 30.8x FY16F and 25.4x FY17F.'' 

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