Dr Reddy's Laboratories, Warburg Pincus, EQT frontrunners to buy BSV

Advent looking to exit 4 years after it picked up majority stake in biopharma firm

Dr Reddy’s Laboratories (DRL) and global private equity firms EQT and Warburg Pincus are the frontrunners for acquiring Advent’s stake in Mumbai-headquartered biopharmaceuticals firm Bharat Serums and Vaccines (BSV), said sources close to the development.

New Delhi-based Mankind Pharma too is in the fray, but it is taking a more conservative approach to valuation, according to sources.

“BSV is being valued at $1.25-1.5 billion at the moment, which is down from the earlier $2 billion. In 2019 the company was valued at $500 million,” said a source, who added that Mankind Pharma was interested in the deal if the valuations were a bit more conservative.

Mankind Pharma, DRL, EQT, and Warburg Pincus declined to comment on the matter.

Private-equity (PE) major Advent International is looking to exit BSV four years after it picked up a majority stake in it. Advent acquired a 74 per cent stake in BSV in February 2020, providing a complete exit to PE investors OrbiMed Asia and Kotak PE and a partial exit to the promoter Daftary family.

Following approval from the Department of Pharmaceuticals (DoP), Advent bought the remaining 26 per cent from the Daftary family in 2023-24.

It is estimated that BSV posted earnings before interest, tax, depreciation, and amortisation (Ebitda) of Rs 500 crore in FY24 and is eyeing Rs 650 crore Ebitda in FY25.

The sellers are thus looking at a 20-25 times multiple of the FY25 Ebitda.

An industry source close to the developments said BSV made women’s health products, assisted reproductive therapy, and also critical care products.

“With growing infertility, such products are in high demand and the market is growing. This explains the interest of the pharma firms in BSV,” the source added.

Since the end of last year several reports have said a bunch of pharmaceutical companies including Zydus Cadila and DRL, and PE majors like Carlyle, Blackstone, and KKR, have been pursuing Advent’s stake in BSV.

Around 20 million couples in India alone experience infertility, which affects 60–80 million couples globally.

BSV has products for conditions like endometriosis, a condition that affects 109 million women worldwide and around 25 million in India.

The company was set up in 1971 with Vinod Daftary opening a blood bank and eventually launching an injectable for expecting mothers. Over the next few years the company started exporting polyclonal sera, and set up a manufacturing plant in Thane.

It has facilities approved by the United States (US) Food and Drug Administration and the European Union (in Germany) and operates in the Philippines through a wholly owned subsidiary.

Earlier this year, DRL acquired the MenoLabs business, a leading women’s health and dietary supplements branded portfolio, from US-based Amyris Inc as a part of its Chapter 11 bankruptcy sales process. The deal size was not disclosed. DRL had said it had acquired the entire MenoLabs supplements portfolio, which includes seven branded products designed to provide health support and address symptoms of perimenopause and menopause.

DRL, which wants to be among the top five domestic pharma companies, has been strengthening its portfolio through in-licensing opportunities and partnerships. However, the essentially acute-therapy-focused company is now eyeing inorganic growth in the medium term to boost its chronic portfolio, a fast-growing evergreen segment of the Indian pharma market. Speaking to Business Standard recently, MV Ramana, chief executive officer, branded markets (India and emerging markets), had said the company was scouting for inorganic opportunities to add to its India-growth plans.

It continues to look at inorganic opportunities, which is the other leg of the India-growth plan, he said. DRL now draws only 30 per cent of its revenues from chronic therapies, which involve patients continuing medication for several months or even lifelong.

Mankind Pharma too indicated in the fourth quarter call it was looking for assets for acquisition with a focus on the chronic, consumer and high-entry barrier segments, which complement and add value. And for this, the company’s board has approved raising up to Rs 7,500 crore.