US-based private equity investor Advent International on July 30 said it has signed a definitive agreement to acquire a controlling stake in RA Chem Pharma, a vertically integrated pharmaceutical company from Micro Labs.
Founded in 2003, the Hyderabad-based RA Chem Pharma is focused on active pharmaceutical ingredient (API) production, but over time the company has forward integrated into pellets, formulations and clinical research to provide end-to-end offerings to its customers.
Its product portfolio ranges from pharmaceuticals to niche areas of Animal Health and Cosmeceuticals; supported by 4 manufacturing units, two R&D laboratories and a clinical research facility.“We continue to be excited about India’s pharmaceutical landscape and investing in RA Chem Pharma will further strengthen our presence in the sector," said Shweta Jalan, Managing Director and Head of India at Advent International, India.
“We are impressed with RA Chem Pharma’s niche product portfolio and business trajectory. It is uniquely positioned to achieve further growth, in what is a highly fragmented market, given its vertically integrated capabilities, the extent of backward integration and robust near-term pipeline,” said Pankaj Patwari, Director, Advent International India.
China has a stranglehold on pharmaceutical raw materials like APIs and intermediates. Indian companies rely heavily on China for their drug raw materials, the figures may vary by a wide margin due to direct and indirect consumption, but analysts say it could be anywhere between 60 - 90 percent.
Advent International has significant experience in the healthcare industry globally.
In the past 30 years, the firm has invested or committed over $9 billion in 48 companies in the sector, including 20 businesses involved in pharmaceutical R&D, production and distribution.Advent has been investing in India since 2007. In this time, it has deployed almost $1.7 billion in 12 companies with headquarters or operations in the country. In addition to RA Chem Ltd, new investments in last 12 months include Bharat Serums and Vaccines (BSV), Aditya Birla Capital, the holding company of the financial services businesses of Aditya Birla Group (ABG), an Indian multinational conglomerate; and DFM Foods, a leading manufacturer of packaged snack foods
Nomura acted as the sole financial advisor to Micro Labs for the transaction.