Adar Poonawalla-led Serum Institute in talks with TPG to sell 40% stake in SCHOTT Poonawalla

Adar Poonawalla-led Serum Institute in talks with TPG to sell 40% stake in SCHOTT Poonawalla

Billionaire Adar Poonawalla-led Serum Institute of India has held discussions with global private equity firm TPG to sell 40% stake held by the top vaccine maker in SCHOTT Poonawalla, four people in the know told Moneycontrol on the condition of anonymity.

Mumbai-headquartered SCHOTT Poonawalla is a leading primary glass packaging provider for the pharma and biotech sectors and a 50:50 joint venture between Serum Institute of India and SCHOTT Pharma AG & Co, which is part of German speciality glass firm SCHOTT AG.

"Discussions between both parties have reached an advanced stage. Serum Institute, which made the investment more than three years back, plans to unlock value by selling 40% stake in the joint venture to TPG," said one of the persons above, adding that the negotiations may or may not necessarily fructify into an eventual transaction.

Two other people confirmed the above.

"Serum Institute does not plan to make a full exit from the JV and intends to hold onto the balance 10% stake. The deal is likely to value SCHOTT Poonawalla upwards of $600 million," the fourth person elaborated.

According to a pharma industry expert who spoke on the condition of anonymity, "SCHOTT Poonawalla is a niche, specialised manufacturing business with scale and hence, would attract PE interest."

TPG and Serum Institute of India declined to comment. Moneycontrol is awaiting the response to an email query sent to SCHOTT Poonawalla.

When contacted, a spokesperson for SCHOTT Pharma said, "SCHOTT Poonawalla is a 50 – 50 joint venture between the Serum Institute of India and SCHOTT Pharma AG & Co. KGaA. In general, we do not comment on matters related to our partners or customers."

The statement added, "We remain focused on our joint venture and its continued success. India plays a vital role in our manufacturing network, and we have significantly increased our production capacity over the years. The region is a pharmaceutical manufacturing hub and one of our most important markets. Please refer directly to the Serum Institute of India for any specific questions regarding their business."

Post the outbreak of Covid-19, in August 2021, Serum Institute, the world‘s largest vaccine producer and manufacturer of highly effective biologics, purchased 50% stake in the joint venture SCHOTT Kaisha from former co-owners Kairus Dadachanji and Shapoor Mistry.

As part of the stake acquisition announcement , Adar Poonawalla, CEO, Serum Institute of India, had said: “Even the best medication can’t reach the patient without the right packaging. Securing this supply chain is of strategic importance. SCHOTT is the perfect partner for us to do this because of their expertise and global network. As a longtime customer, we use their vials, ampoules and syringes to store our vaccines including Covishield. Working even closer together is in the best interest of global health.”

Established in 1990 as a premium manufacturer of tubular glass pharmaceutical containers, SCHOTT Poonawalla makes pharma packaging products such as vials, syringes, ampoules and cartridges used to package life-saving medications. According to its website, the firm has four manufacturing sites in states like Gujarat and Himachal Pradesh with over 2,000 employees

Recently, Adar Poonawalla-led Serene Production announced the buyout of a 50% stake in Karan Johar's Dharma Productions and Dharmatic Entertainment, for Rs 1,000 crore.

In the Indian pharma and healthcare space, TPG Capital has portfolio firms like Manipal Hospitals and Sai Lifesciences (which has filed draft papers with Sebi in July for an IPO) while TPG Growth backs the likes of eye-treatment focused Dr Agarwal's Healthcare, Nova IVF Fertility and hospital chain Motherhood.

Mainz, Germany-headquartered international technology group SCHOTT AG belongs to the Carl Zeiss Foundation. It produces high-quality components and advanced materials, including specialty glass, glass-ceramics, and polymers.

The SCHOTT Pharma product portfolio ranges from drug containment solutions to drug delivery systems with clients including big pharma innovators, leading CDMOs (contract development manufacturing organisation's), biotech firms and startups. The firm has more than 1,000 patents and produces more than 13 billion drug containers annually.