Zydus Lifesciences wants to go beyond the pill, bets big on MedTech with Amplitude buy

Zydus Lifesciences is betting big on medtech.

Zydus Lifesciences, one of India's leading drugmakers, is sprinting ahead of others to become a "beyond-the-pill" comprehensive healthcare solutions provider.

Along with consumer health and companion diagnostics, the company is betting big on MedTech, a segment where India still relies largely on imported devices and implants.

The Ahmedabad-based company's latest decision to acquire an 85.6 percent stake in France-based Amplitude Surgical SA, a leading medical technology company specialising in lower-limb orthopaedic solutions for Rs 2,446.5 crore, may give it the heft it is looking for in MedTech.

The Amplitude acquisition comes at an enterprise equity valuation of approximately 300 million euros, funded through a mix of internal accruals and a small dose of debt.

Zydus expects this acquisition to be cash-positive from day one. The company has an EBITDA (Earnings before interest, taxes, depreciation and amortisation) of about 27 million euros. Amplitude provides Zydus the expertise and market access needed to scale its MedTech ambitions.

"We see significant opportunities to grow over the next 5-7 years, and build a very sizable medical devices business," said who is spearheading the "beyond-the-pill" transition.

"This foray helps us in terms of globalising our plans for a med devices play that we want to do, going forward. It brings in great expertise in terms of technology, IP, and the science behind medical implants," Patel said.

'Indian MedTech market to hit $50 billion by 2030'

According to multinational accounting and consulting firm Ernst & Young (E&Y), the Indian MedTech market size, valued at $12 billion in 2023-24, is projected to reach $50 billion by 2030, at a compounded annual growth rate (CAGR) expectations of around 20.1 percent between 2020 and 2030.

The global market share of the medical device industry in India is expected to grow from the current 1.65 percent to 10-12 percent within 25 years. Globally, the MedTech industry is estimated to reach $670 billion by 2029. The top 5 OEMs account for more than 50 percent of the market.

Patel wants a pie of that growth. He has outlined three key areas for MedTech expansion-- orthopedic implants, interventional cardiology and nephrology.

Zydus Lifesciences has incorporated a new entity for the business, onboarded 150 people with deep experience in MedTech, with cross-functional expertise in research, manufacturing, quality, regulatory, sales, finance and HR functions. The company is also pinning its hopes on its ability to cross-sell the devices to hospitals and doctors who prescribe their drugs.

Patel said Zydus is not only looking at organic growth but is also open to partnerships and acquisitions.

Amplitude will give a head start in orthopedic implants for joint replacements. Zydus is developing cutting-edge stents and other cardiac devices. Last year, the company acquired Nanotherapeutics for 72 million euros. "We have started commercialisation and hope to build new R&D-driven products, including drug-eluting stents," the company said.

Dialyzer manufacturing facility

In the nephrology segment, it is establishing a state-of-the-art dialyzer manufacturing facility, positioning Zydus among the few Indian companies to produce high-end dialyzer membranes for kidney care. The company expects the dialyzer project to go live in 1.5-2 years after regulatory approvals.

Patel said the company aims to export dialysis solutions worldwide, reducing reliance on imported dialysis membranes.

India’s medical technology sector is heavily dependent on imports, something Zydus is keen to change, Patel says.

"Today, there is a high burden of import versus export, and there is a big skew towards a large amount of imports related to med devices. This offers us a great opportunity to build out a strong Indian global player in the med devices space," Patel said.

Experts say large to mid-size Indian pharma companies, including Zydus, are looking to diversify beyond selling branded generic medicines, which, they feel, may be increasingly under threat from trade generics and generics-generics.

Some of the recent examples of diversification include Lupin's entry into diagnostics, the intense interest by pharma companies, such as Cipla and Alkem, to acquire cardiac stent maker Sahajanand Medical Technologies. Mankind Pharma had evinced interest in Healthium Medtech, but it was eventually acquired by PE firm KKR.

"When it comes to India, the onslaught of the trade generics and generic generics essentially is creating that much more challenge to growth, especially on the volume side as far as pharma companies are concerned," said Amit Misra, Managing Director with consulting firm Alvarez and Marsal's Healthcare and Life Sciences practice in Mumbai.

"So, looking at newer allied businesses is also something which is very much on the top of mind for each of these guys," Misra added.

"Any well-performing company will always have cash. They will have the ability to essentially invest in growth," Misra added.

But analysts caution that replicating the success companies had with pharmaceuticals, especially generic medicines, in the MedTech space won't be easy, due to the complex regulations, gaining market access, and competition.