This is the first time that a Chinese parental drug maker is going to list in the Indian indices. Gland pharma, majority owned by Shanghai Fosun pharmaceutical has received green signal from SEBI to raise 6,000 crores from the new issue market. It’s been three years since the Indian equity market has seen any pharma IPO after the Indian drugmaker Eris Lifesciences was listed on the Indian bourses. Despite the ongoing tensions between India and China due to military aggression in the Eastern Ladakh, the market regulator Securities and Executive Board of India (SEBI) has given approval. The issue size of Rs. 6,000 crores is a mix of offer for sale and fresh issue. According to Draft Red Herring Prospectus, the issue comprises of Rs. 1,250 crores to be raised from issuance of fresh equity while the residual amount of Rs. 4,750 crores will be an Offer for Sale. The promoters of the company Fosun Singapore, Gland Celsus, Empoer Trust and Nilay Trust are offloading their stake. U.S.-based Private equity firm KKR is exiting through the offer. Net proceeds from the issue will be utilized for augmenting capital expenditure and taking care of working capital operations in India.
Hyderabad-based-Indian drug-maker was established in 1978 as a contract manufacturer of small volume liquid parenteral products, to become one of the largest and fastest growing injectable-focused companies, with a global footprint across 60 countries, including the United States, Europe, Canada, Australia, India and other markets. The company operates a Business to Business (B2B) model and claims an excellent track record in the development, manufacturing and marketing of complex injectables. The company has extensive portfolio of complex products supported by internal R&D and regulatory capabilities. The manufacturing facilities of the company have been approved by the US Food and Drug Administration (USFDA) and United Kingdom Medicines and Healthcare Products Regulatory Agency (UK MHRA).
On the financial front, the company is almost debt-free having 4.69 crores as borrowing on its balance sheet. The drugmaker had posted 29% increase in revenues this year while net profits were increased more than 70%. Return on Net Worth (RONW) of the company is 21.20%. B2B solution drugmakers have performed stellar in the recent years in Indian equity market and the company is expected to sense tough competition from Divi’s Lab, Eris Lifesciences, Jubilant Lifesciences, Hikal, Dishman Carbogen in the listed space, still the product portfolio offered by the company is completely distinct.
Citi, Nomura, Kotak Mahindra Capital and Haitong Securities are the merchant bankers who are working on the IPO regulations. Cyril Amarchand Mangaldas and Co. is advising Gland Pharma, S&R Associates is advising the merchant bankers while Khaitan and Co is advising the promoters.