Private equity firms ChrysCapital, Apollo Global Management, Kedaara Capital and Multiples Equity are evaluating the acquisition of Novartis AG’s 70.68% stake in its India-listed arm, according to the people with knowledge of the matter. Alternatively, they may acquire the global drugmaker’s assets, the sources added.
In a notification on February 16, Novartis confirmed it was carrying out a strategic review of the listed entity Novartis India. It confirmed that the review would not impact Novartis Healthcare Pvt Ltd unlisted Indian entity that houses Novartis’ corporate centre at Hyderabad well as a commercial arm and R&D teams that conduct clinical trials at 300 sites in the country.
The PE firms are up against Dr Reddy’s, which has an alliance with Novartis for marketing some of its off-patent products and is also expected to bid. Alkem Labs is also in the fray. Novartis India has a market capitalisation of around Rs 2,500 crore though bids are likely to value it lower, as per those in the know. Non-binding bids are due later this month.
In response to ET’s queries, Novartis AG pointed to its February communication to Indian bourses. ChrysCapital, Kedaara, Multiples, Dr Reddy’s and Alkem did not respond to queries. Apollo Global denied it was interested in Novartis’s listed Indian entity. “This is completely inaccurate”, said an Apollo Global spokesperson.
May prefer pharma buyer
Novartis India is attractive to PE firms as it would give them a ready platform of products they can easily scale up, said the sources cited earlier, while cautioning that the parent drugmaker may prefer a sale to a pharmaceutical company.
For the current fiscal, Novartis India is expected to have sales of about Rs 500 crore and profit margins of 25-30%. Its key products are Simulect, Certican, Sandimmun, Neoral and Myfortic, administered to patients who have undergone organ transplants.
“Organ transplant procedures are projected to grow at 11% in 2024, primarily contributed by increased medical tourism supported by budget-friendly packages, advancement in surgical techniques, and government initiatives like the Angdaan Mahotsav awareness campaign,” Novartis India said in its most recent annual report. It noted that insurance cover for transplant procedures would also increase their adoption.
“The incorporation of kidney, heart, lung, and liver transplants under PM-JAY Ayushman Bharat and Rashtriya Arogya Nidhi with financial support for BPL patients demonstrates a commitment to accessibility of Organ transplants in India,” it said.
Other key products sold by Novartis India are popular painkiller Voveran and Tegrital, used to treat epilepsy and Exelon patches for dementia patients.
ChrysCapital, the most successful pharma investor in the country, has made multiple investment bets in the sector. These include Mankind Pharma, Intas Pharma and most recently La Renon Healthcare.
Multiples is an investor in BDR Pharma. Kedaara Capital has an investment in Universal Nutriscience. Apollo Global is not currently invested in an Indian pharma company but had pursued a bid for Novartis’ generic products in the US in the past.
Source: Economic Times