Eris down 4 percent in 2 days post acquisition of 9 derma brands from Dr Reddys

Shares of Eris Lifesciences declined 2 per cent to hit two-year low of Rs 570 in Friday’s intra-day trade. The stock fell 4 per cent in two days after the company acquired nine dermatology brands from Dr Reddy's Laboratories for Rs 275 crore. The stock quoted its lowest level since March 2021.

The management said that this transaction would help augment and expand cosmetic dermatology business of the company through product offerings.

In January, Eris had bought some derma brands from Glenmark Pharma as well. Eris Oaknet Healthcare, a wholly owned subsidiary of Eris Lifesciences bought tail end brands from its derma segment for India and Nepal for Rs 340 crore from Glenmark. The portfolio has an annual revenue base of around Rs 85 crore.

In the past one month, Eris has underperformed the market as shares tumbled 11 per cent, as compared to 5 per cent decline in the S&P BSE Sensex. In the past six months, meanwhile, it declined 20 per cent, as against 1.6 per cent fall in the benchmark index.

Meanwhile, Dr Reddy in exchange filing announced the signing of a deal to divest certain non-core brands of the company in the dermatology segments to Eris Lifesciences.

"Under the agreement, Eris Lifesciences will be assigned the trademark of these brands by Dr. Reddy’s for a consideration of Rs 275 crore. As per IQVIA MAT December 2022, the divested portfolio saw sales of Rs 60 crore in India," the company said.

Analysts at ICICI Securities believe that the deal is in line with industry metrics and will not have any significant impact on revenues (<1 per cent of FY23E sales), going forward, for Dr Reddy’s post divestment.

Shares of Dr Reddy’s gained 2 per cent to Rs 4,469 on the BSE in intra-day trade today.