The British Private equity firm Apax Partners has started the process to sell Healthium Medtech, the largest homegrown surgical sutures manufacturer, said multiple people aware of the development. The proposed sale is expected to value the company at ₹6,500-₹7,000 crore ($850 million), said sources.
Healthium (formerly Sutures India) is the fourth largest surgical suture manufacturer in the world and the second largest in the country with a market share of about 18%.
“Discussions with various investment bankers were started and one will be hired shortly,” said sources. This latest move comes after the listing plans were called off in 2021.
Apax Partners holds about 99.8% stake in Healthium. In 2018, Quinag Acquisition (FDI), a company backed by funds advised by Apax Partners, acquired the stake from PE funds TPG Growth, CX Partners, and founding shareholders, for about ₹1,950 crore ($300 million).
The market for surgical sutures is primarily dominated by Johnson & Johnson, through its brand Ethicon, which is the leader in India with about 55% market share.
Apax Partners spokesperson declined to comment.
The domestic surgical sutures market will continue to grow at a compound annual growth rate of over 13% to reach $380 million in 2030, according to GlobalData’s report, ‘India Surgical Sutures Market Share.’ India will account for about 18% of the Asia-Pacific (APAC) surgical sutures market, by revenue, in 2023, it said.
Ethicon Inc, Arthrex Inc, and Covidien Holding Inc are some of the global players in this surgical sutures market.
Healthium (formerly Sutures India), was set up in 1992 in Bengaluru by L.G. Chandrasekhar and S. Subramanium, former executives with Smith & Nephew, and Johnson & Johnson. The Healthium Group has five key product areas – advanced surgery, arthroscopy, urology, wound care and consumables. Healthium is the largest manufacturer of surgical needles globally by volume.
The group exports its products to over 80 countries in Europe, South America, Africa and Asia. Consequently, revenues in foreign currency constituted around 59% of its FY 2022 revenues, said ICRA report. The domestic market contributed to around 41% of its total sales in FY2022 on a consolidated basis. With its top 10 customers generating about 31% of its total revenues in FY2022, the group has moderate client concentration risk. It posted a consolidated revenue of ₹929 crore in FY22.
The company has a strong position in tier two- six cities in India where competitors have lower presence, giving the company a competitive advantage, said a ICRA report. Healthium products are claimed to have covered over 40,000 surgeons across 18,000 hospitals, reaching 90% of all districts in India.
In December 2022, Healthium had sold its UK-based subsidiary Clinisupplies to KKR Health Care Strategic Growth Fund II, for an undisclosed amount.
The investment in Healthium in 2018 was the second investment in the healthcare space by Apax in India, following the investment in Apollo Hospitals in 2007. In 2013, Apax exited Apollo Hospitals with a 3-fold return.
In October, Apax Partners had made an exit from Manappuram Finance Limited (MFL), through the on-market sale of its 9.9% stake, for a total consideration of ₹1,169 crore.
India’s public spending on healthcare services remains much lower than its global peers. India’s per-capita total expenditure on healthcare was only $56.6 in CY2020 versus the US’s $11,702, the UK’s $4,926 and Singapore’s $3,537. India has one of the highest shares of out-of-pocket expenditure in healthcare; however, the government aims to increase public healthcare expenditure to 2.5-3% of GDP by 2025 from the current 2%, as per the National Health Policy.
Source: Economic Times