Share price of one of India’s largest integrated Contract Development and Manufacturing Organization (CDMO) players, surged 5.6 percent to Rs. 705 on Friday, after the company announced to acquire a Hyderabad-based CDMO firm Sapla Organics.
At 11:41 a.m., the shares of Suven Pharmaceuticals Limited were trading in the green at Rs. 697.85, up by 4.6 percent, as against its previous closing price of Rs. 667.25, having a market cap of Rs. 17,764.8 crore.
Suven Pharmaceuticals informed the stock exchanges about executing definitive agreements for acquiring 100 percent of equity shares in Sapala Organics Private Limited.
Earlier, the company planned to acquire 67.5 percent by way of secondary transfer, out of which Suven has acquired 51 percent of the share capital of Sapala Organics on a fully diluted basis.
The company expects to complete the acquisition 67.5 percent equity stake during Q2 FY24- 25, for a consideration of Rs. 229.5 crore.
Further, after FY26-27, Suven will acquire the remaining shareholding through a secondary purchase, such that, post-consummation, it will own 100 percent of the share capital of the Sapala Organics on a fully diluted basis.
Incorporated in 2005, Sapala Organics is a Hyderabad-based CDMO focused on Oligo drugs and nucleic acid building blocks including Phosphoramidites & Nucleosides, drug delivery compounds, Pseudouridine, amongst others. Other than India, Sapala Organics has business operations in Japan through an affiliated entity.
One of the key reasons for the proposed acquisition is that Sapala Organics is amongst the few CDMOs in the high-growth Oligo building blocks & nucleic acid space and has developed expertise in highly complex specialised building blocks which is a strong differentiator.
It fits Suven’s thesis of adding a differentiated platform technology and there are potential synergies from leveraging GMP manufacturing and customer cross-selling.
The company would require approval from the Department of Pharmaceuticals to acquire more than 74 percent of the shareholding of Sapala Organics, as required under the extant foreign exchange management framework in India.
On a quarter-on-quarter basis, the company’s consolidated revenue from operations stood at Rs. 252.93 crore in Q4 FY23-24, increasing by 15.06 percent from Rs. 219.82 crore in Q3 FY23-24.
The after-tax profit grew from Rs. 46.75 crore in Q3 FY23-24 to Rs. 53.4 crore in Q4 FY23-24, indicating a growth of 14.2 percent QoQ.
Suven Pharmaceuticals Limited is a bio-pharmaceutical company engaged in the business of development and manufacturing of New Chemical Entity (NCE) based Intermediates, Active Pharmaceutical Ingredients (API), Speciality Chemicals and formulated drugs under contract research and manufacturing services for global pharmaceutical, biotechnology and chemical companies.
Written by Shivani Singh
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