Chennai-based Apollo Hospitals, which runs the country's largest hospital and pharmacy chains, is all set to acquire Hyderabad-based retail pharmacy chain Hetero Pharmacy at a potential cost of around ₹300 crore, two persons familiar with the deal told Economic Times.
Hetero Pharmacy owns 250 outlets across Andhra Pradesh, Telangana and Tamil Nadu.
"Apollo is looking at aggressively adding more stores both through organic and inorganic routes," Economic Times quoted an official.
"The deal, which could be valued at around ₹300 crore, would help Apollo consolidate its pharmacy business and augment profitability," source added.
Hetero group's senior executive said that the company is looking at exiting the pharmacy business due to pressure on profit margins imposed by the government which has led to surge in prices of 400 varieties of drugs.
He added that the deal is expected to be closed in a couple of months.
Another senior official from Apollo Hospitals acknowledged that strict regulations by the government has led to an increase in drug prices leaving retail pharmacy outlets to incur losses. "Smaller players like Hetero will find it difficult to stay afloat, offering an opportunity for players like us to grow inorganically," an official added.
Apollo Hospitals plans to add at least 240 stores over the next two years with revenue growth of ₹1,650 crore by March next year from ₹1,364 crore in 2014.
Apollo's 80% revenue is through sales from prescription drugs and the balance from wellness products. Besides India, Apollo has hospitals in Sri Lanka, Bangladesh, Ghana, Nigeria, Mauritius, Qatar, Oman and Kuwait.