Laurus Labs, one of the world's largest producer of anti-HIV and hepatitis-C bulk drugs, has diversified into biotech with the acquisition of majority stake in Bengaluru-based Richcore Lifesciences.
Laurus agreed to pay Rs. 246.7 crores to acquire 72.55% of Richcore’s shares from venture capitalists Eight Roads Ventures and VenturEast. Richcore is a contract developer and manufacturer of enzymes and proteins used in food and drugs.
Laurus said the acquisition will add one fourth revenue stream to its existing active pharmaceutical ingredients, formulations and custom synthesis divisions.
In an interview to Moneycontrol, Satyanarayana Chava, CEO of Laurus Labs, said Richore acquisition will help them leapfrog in biotech which is considered to be capital intensive with high gestation periods for breakeven.
"Initially we have started with APIs, then focused on custom synthesis and formulations. We also need another growth driver for us, we thought biotechnology would be that biggest driver," Satyanarayana said.
"But when you want to get into the space organically, the gestation period is 6-7 years, even if you have meaningful R&D capabilities, we decided to go inorganic to see that the gestation period is less. Richcore has already has fermentation capabablities and customers, and we will only help them to grow," he said.
"We are offering CDMO (contract development and manufacturing organisation) in small molecules, we want to be a leading CDMO in offering animal origin free recombinant proteins and enzymes used in both food and therapeutic purposes," Chava added.
Recombinant is a technique where genetically engineered microorganisms like bacteria and yeast are used to produce protein of choice. The technology is used in manufacturing vaccines, insulins, and other biopharma other animal and human blood derived products and in turn produce safer medicines.
Richore has sales of Rs 29 crore in the first half of FY21. Laurus has been one of the most profitable companies this fiscal, with its formulations, custom synthesis and API business doing well. Revenues of Laurus rose 67 percent year-on-year (YoY) to Rs 2,113 crore in H1FY21 and with a net profit of Rs 414 crore.
The company currently produces naturally produced enzymes and proteins such as carboxypeptidase B, trypsin, human albumin, transferrin and human growth factor IGF-1 hormone.
Richcore is currently in its growth phase and its second manufacturing plant near Bengaluru is expected to be completed by 31 March 2021. Richcore has raised early and growth stage funding from Eight Roads Ventures, VenturEast Proactive Fund and VenturEast Life Fund III.
Chava said the current promoters of Richcore led by Subramani Ramachandrappa will continue as promoters and will be responsible for its management and operations.