Torrent Pharmaceuticals and KKR-controlled JB Chemicals are among the final contenders to acquire Chennai-based Curatio Healthcare for about ₹2,500 crore in what could be the continuation of M&A deals in the pharma and life sciences space.
Dr Reddy’s Laboratories is also understood to have made to the penultimate round of bidding process, people with direct knowledge of the matter told ET. The transaction will see the exit of existing investors such as ChrysCapital and Sequoia Capital. Promoters are expected to stay on with a minority holding.
At present, venture capital fund Sequoia holds about 33.3% of Curatio Healthcare and ChrysCap owns about 20%. Promoters, including GK Ramani, and the management hold the rest. Spokespeople for ChrysCapital, Dr Reddy’s and JB Chemicals declined to comment, while mails sent to Torrent and Sequoia did not elicit any responses till press time on Sunday. Edelweiss and Mape Advisory had been hired to run the formal process to find a buyer.
Half a dozen pharmaceutical majors – Aurobindo, Biocon, Dr Reddy’s, JB Chemicals, Torrent Pharma and Zydus Healthcare – were shortlisted in the second round for the acquisition of Curatio Healthcare, ET reported on March 7. Others who were interested included PE buyout funds Advent International, Apax Partners and Warburg Pincus.
In 2018, ChrysCap acquired the minority stake from Fulcrum Venture India in a deal worth ₹130 crore. Sequoia invested about ₹100 crore in Curatio Healthcare in 2014.
Curatio Healthcare operates with a network of more than 700 distributors, reaching over 6,000 doctors across India, focusing on dermatologists, paediatricians and gynaecologists, according to a company statement. Its largest brand is Tedibar baby soap. The skincare products market in India was valued at ₹13,000 crore in 2020 and growing at a compound annual rate of 11%.
The company is expected to report revenue of ₹240 crore for 2021-22, with an Ebitda of ₹75 crore. It has a projection of ₹350 crore revenue and ₹100 crore Ebitda for the current fiscal year, said one of the people. Curatio Healthcare was set up in 2005 by a team of former executives of American Remedies including K Ramanathan and Ramani, after their company was merged with Dr Reddy’s Labs in 1999. In 2005, angel investor Fulcrum (under founder-partner Krishna Ramanathan) and Ramani acquired a 70% stake.
Torrent Pharma has a history of big-ticket buyouts in the Indian drug industry. In 2017, Torrent had acquired the domestic branded business of Unichem for about ₹3,600 crore – the largest buyout by it in India.
Its previous biggest transaction was the purchase of Elder Pharma’s domestic formulations business for ₹2,004 crore in 2014. In 2015, Torrent had acquired Zyg Pharma, a manufacturer of dermatological formulations and part of the Encore Group. In 2017, Torrent had acquired Regestrone and Pregachieve – brands in the female healthcare segment from Novartis AG for ₹400 crore.
In 2020, promoters of JB Chemicals, the Mody family, had sold 54% stake in JB Chemicals & Pharmaceuticals to KKR for ₹3,100 crore. Following the deal, JB Chemicals has been looking for buyouts in the domestic pharma industry.
In January, JB Chemicals acquired brands from Hyderabad-based Sanzyme for ₹628 crore, marking its entry into the probiotics, therapeutic nutraceuticals and reproductive health market.
“While capital continues to be readily accessible for most of the pharma and life sciences sector, the need for clearly defined and actionable value creation plans in an environment with seller’s high price expectations has made it more important than ever to drive shareholder returns. The ever-changing regulatory landscape, the potential for US and global tax reform, and the continued focus on the affordability of drugs will remain issues that the sector will need to consider when executing deals in 2022 and beyond,” PwC said in a January report.
India’s pharmaceutical sector witnessed deals worth $2.2 billion in 2021 against $2.9 billion in 2020.
