Online BusinessSanofi buys Shantha in offshore deal
In another indication of Big Pharma’s growing interest in India’s drug manufacturing capabilities, French drug multinational Sanofi Aventis has announced plans to acquire Merieux Alliance’s majority stake in Hyderabad-based vaccine firm Shantha Biotechnics.
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Merieux Alliance owns 80 per cent in Shantha through its subsidiary ShanH.
The offshore deal, which values Shantha at ¤550 million (about Rs 3,783 crore), will see Sanofi’s vaccine division — Sanofi Pasteur — acquire ShanH"s 80 per cent stake in Shantha. The deal will close before the end of third quarter.
Sources said GlaxoSmithKline had already reportedly expressed interest in the company. This will be the fourth major deal involving an overseas drug company since 2006.
Industry analysts termed the valuation “extremely good”. For the current fiscal year, Shantha’s sales are expected to be around $90 million (Rs 433 crore).
“The valuation is more than fair. The acquisition will see Shantha’s product portfolio being expanded. It will also result in access to newer markets and thereby significant growth in sales,” said Vara Prasad Reddy, managing director, Shantha. Reddy, who holds a minority share in the unlisted company, will continue to head the company.
Sanofi Pasteur, which currently imports vaccines to India, will now have a manufacturing and research base in the country. Christopher A. Viehbacher, Chief Executive Officer of Sanofi-Aventis, said Shantha’s state-of-the-art manufacturing facilities will allow Sanofi to provide important vaccines at affordable prices around the world.
The French firm will provide Shantha access to new technologies and allow the latter to work on its injectable polio and hepatitis-A vaccine products.
PEP PILLS
(Major M&A deals since 2006)
Indian firm
Foreign firm
Deal size
(Rs cr)
Year
Matrix Laboratories
Mylan Labs (USA)
3,425
2006
Dabur Pharma
Fresenius Kabi (Germany)
878
2008
Ranbaxy
Daiichi Sankyo (Japan)
19,780
2008
After the acquisition, Sanofi will set up a committee to frame its vaccine strategy for emerging markets.
Sanofi Pasteur will also support Shantha’s ongoing research and development programmes as a platform to address the need for high-quality affordable vaccination in international markets.
The company, which employs 870 people, has invested about Rs 5 crore over three years in developing Shanchol, the cholera vaccine, in collaboration with the International Vaccine Institute. It has the capacity to manufacture 5 million doses, which could be ramped up to 25 million doses.