To take a call on Rs 200 cr IPO in 2-3 months
Ahmedabad based injectables major Claris Lifesciences is weighing the option for a buyout in European countries. The acquisition, if fructifies, could bring in a new manufacturing facility or new product portfolio.
"So far we have grown organically and are now exploring the inorganic way. We are open to acquisitions in regulated markets like Europe that can expand our product portfolio as we plan to enter into new verticles like oncology," said Arjun Handa, managing director and CEO of Claris Lifesciences.
Meanwhile, Claris is also mulling to hit the capital markets to fund its Rs 200 crore expansion lined up. The Rs 750 crore company, started in the year 2000, has seen the share of revenue from regulated markets rise from 5 per cent in 2007 calendar year to 13 per cent in 2008, to around 16 per cent in 2009.
"The compounded annual growth rate for sales in the regulated markets of the US and European countries has been around 30-35 per cent over the years, and sales in these markets will now propel our growth forward," said Arjun Handa, managing director and CEO of Claris Lifesciences. The share of revenue from domestic sales which is around 40 per cent now is likely to go down further in the years to come. "Besides expanding our current set up, we are trying to bring in new tehnology in drug delivery systems and move up the value chain. Our focus would be on oncology products, and pre-filled syringes," he added.
When asked if the overseas acquisition would be to bring in a new manufacturing facility, Handa said that it could be a company that could bring in new products or molecules in these strategic areas, and thereby expand Claris' product portfolio. He did not give details on the size of the acquisition though.
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Claris has strength in segments like anesthesia, anti-infection, renal care and clinical nutrition, with a total basket of 75 molecules. The company is developing another 40 products, mainly targeted at the US market.
It currently operates in a niche product market with a size of around $14-15 billion globally, while the net injectables market is estimated at $140 billion. It has embarked on a Rs 200 crore expansion plan, and started work on its fourth manufacturing set up at its Ahmedabad site that will double its critical care products manufacturing capacity.
It plans to add another three such lines at its 78 acre campus here, with the next one being a dedicated oncology facility.
"It usually takes a year for construction, and nearly another year goes into getting the international regulatory approvals before one can start commercial production. The expansion is part of a long term three to five years plan," Handa explained.
Talking of raising funds for the expansion, Handa said "We have profit after tax of Rs 135 crore and a surplus of Rs 200 crore on our balance sheets. We are assessing routes of raising funds for expansion.It could be either through debt or we could also enter the capital markets. We will take a call in the next two-three months".
US based private equity firm Carlyle had invested $20 million in Claris in 2006 for a 13.8 per cent stake. The remaining equity is with the Handa family.
The company is also eying drug supply deals in the lines of the one it pulled off with Pfizer Inc last year under which the global drug major markets Claris' products in the US and EU markets under its brand. "Pfizer markets our anaesthetics and anti-infective products and in the next three years we expect sales from this tie-up to contribute 15-20 per cent of our net turnover in the next three years," Handa said adding that Claris was in talks with some global giants for a similar deal.
"We are not interested in contract manufacturing, we are looking forward to licensing deals," he clarified adding that the company is trying to maintain a 20 per cent overall growth rate over the coming years.
Claris and Pfizer had entered into a deal in May last year for supply of sterile injectable drugs that are off-patent and have lost exclusivity in the US, Canada, Australia, New Zealand and Europe.
The pact was to supply a dozen generic injectables for 15 years.