Hyderabad-based Gland Pharma’s initial public offering (IPO) to raise almost ₹6,500 crore, making it one of the largest IPOs in India’s pharmaceutical space, is all set to open on November 9.
The price band has been set at ₹1,490 – ₹1,500 per share (of face value ₹1 each). An injectable-focused company operating primarily under a B2B (business to business) model, Gland Pharma’s majority stakeholder is Shanghai Fosun Pharma.
A combination of primary and secondary sale of shares, the IPO will reduce Fosun Pharma holding from 74% to 58.3%. Besides Fosun Pharma Industrial Pte Ltd, other shareholders who will shed stakes are Gland Celsus, Empower Trust and Nilay Trust.
At the lower end of the price band, the issue size would be ₹6,444 crore and at the higher end, ₹6,479 crore.
To queries, during a virtual interaction with media, on the likely impact of having a Chinese promoter in the backdrop of negative sentiments on China, MD and CEO Srinivas Sadu said it was unlikely to have an impact as the company had grown under different investors.
“We always build the company around our strengths. We have a robust growth plan. We don’t see this impacting,” he said.
On India imposing restrictions on Chinese companies, he said no restrictions were expected in the essential commodity sector in which Gland Pharma operated.
Pointing out that Gland Pharma was a global company, he said “we sell to several companies, mostly in the U.S.. Even our procurement is across the globe. Probably, from China, we get 25% of the materials. We also have done vertical integration as well. That way, I don’t think we will be impacted.”
The company intends to leverage Fosun’s reach to access certain markets in Africa and Europe as part of its geographic expansion plans.
The primary sale component of the IPO is expected to mop up ₹1,250 crore, which will be utilised primarily towards meeting incremental capital expenditure and working capital requirements. The company is commissioning additional capacity to support future portfolio of complex injectables and new delivery formats, including pens and carriages.
It is also considering strategic acquisitions of companies, products and technologies that will add to its capabilities and technical expertise or forge partnerships to strengthen the product and technology infrastructure in areas, including steroidal hormonal products, suspensions, anti-neoplastics and nasal and inhalation products. We will seek to identify API suppliers that complement our business with niche capabilities, including fermentation technology, corticosteroid APIs and hormonal APIs as well as partners with USFDA-approved facilities to reduce market entry time.
Later, in an interview, Mr. Sadu said almost 20% of its revenue came from anti-infective space or products such as Vancomysin and Streptomycin which were based on fermentation technology.
“Currently, we are sourcing these APIs and converting them into finished products. In a long run, to strengthen our vertical integration strategy, we want to get into that as well. We are investing in hormonal lines [that] fall into the category of fermentation technology. By getting in this space, we will get advantage in terms of margin profile and in terms of lesser dependence on other companies.” For acquisitions, the company may look for firms in Italy, China and East Europe, he added.
On expansion of facilities in India, he said the company has seven manufacturing sites across Hyderabad and Visakhapatnam and intends to continue with their expansion.
“We have enough space to expand in terms of finished products and APIs, at least in next five years,” he said, adding it has been spending ₹200-300 crore every year in capital expenditure.