Fulcrum Venture India, an early stage venture capital investor, today announced an investment of Rs 21.82 crore in Chennai-based Shield Healthcare, a pharmaceutical company in the branded formulations space. Shield Healthcare will use the proceeds to fund its business geographically and vertically integrate a manufacturing unit. As an integral part of this deal, Krishna Ramanathan, founder partner of Fulcrum Venture India will join the Board of Directors of the Shield Healthcare.
Ramanathan said, “Fulcrum Venture India looks forward to scaling up of Shield Healthcare over the next 5-7 years. The company carries a strong product catalogue and with the growth of new products in the gynaecology and consultant physician segments. Fulcrum expects Shield revenue to increase significantly over the coming year, thereafter growing exponentially to Rs 100 crore by 2016 yielding an EBIDTA of 26-30% according to pharma Industry standards. We also consider the valuation attractive given Fulcrum’s deep domain knowledge in the formulations business.” Ramanathan was the founder of American Remedies which was acquired by Dr Reddy's Laboratories in 1999.
Shield with an FY12 topline of Rs 24 crore, got into expansion mode recently to enlarge its southern and eastern presence into a pan Indian one. The company will close at a topline of Rs 31 crore in FY13. To realise its expansion plans Shield decided to launch a manufacturing unit and Fulcrum saw an investment opportunity. It estimates the Factory and SBU will break even in the next 2 years, while the overall company is cash flow positive. Fulcrum believes that further investment into geographical expansion would turn positive cash-flow sooner. Shield is aiming for UK MHRA accreditation by 2013 and expects US FDA approval by 2014.
The main strength of Shield is its management team and focus on building powerful brands, while phasing out other less promising ones. Shield is now focused on brands in the gynaecology and infertility segment. Shield has built into the product assets. The company is present in 10 states with strong presence in Tamil Nadu and Andhra Pradesh.
Fulcrum has been active in developing strategies for expanding sales division and future options of the factory in keeping with its changing investment policy. Fulcrum has been focusing on early stage investing since inception in 2000 and has a successful track record for offering financial support to promising start ups and SMEs in a variety of sectors such as pharma, niche retail, consumer durables, education, IT & Technology.
