VHB Life Sciences plans IPO

The six-decade-old pharmaceutical company VHB Life Sciences will come out with an initial public offer (IPO) in July this year to fund its Rs 400-crore expansion plans in the near future, which include roping in three joint ventures, brand acquisitions, setting up of a research and development centre and upgradation of manufacturing facilities.

VHB is setting up a 50:50 joint venture in India with a mid-sized German pharmaceutical company Genesis Laboratories with an investment of Rs 50 crore to manufacture and export formulations from India.

Named 'VHB-Genext,' the JV will manufacture products of both VHB and Genesis at its Rs 120- crore manufacturing facility coming up at Rudrapur in Uttranchal. The partners will sign the joint venture agreement within two weeks.

Further, VHB is in advanced stages of discussions with prominent local companies in Bangladesh and Latin America for two similar joint ventures, Anju S Gupta, managing director told Business Standard.

The erstwhile VH Bhagat and Company, VHB Life Sciences was started in 1946 by its chairman V H Bhagat as an importer of medicines from multinational pharmaceutical companies.

Currently, with an annual turnover of Rs 290 crore, VHB employs about 2500 people with 10 manufacturing locations in different parts of India. It exports products to 45 less and semi-regulated countries and 15 of its top brands enjoy leadership position as per ORG-IMS in the domestic market in the therapeutic areas of oncology, gynaecology, diabetes, cardiovascular and paediatrics.

Sources said plans are to mobilise Rs 400 crore from the IPO. The promoter family will retain about 70 per cent of the shares and may offer equity worth Rs 100 crore to institutional investors. Kotak Mahindra has been roped in as the lead manager for the IPO.

Sources said about Rs 200 crore would be invested in upgrading some of the existing manufacturing facilities having WHO-Good Manufacturing Practice (GMP) standards, US Food and Drug Administration (USFDA) and UK Medicines and Healthcare Regulatory Agency (MHRA) standards to tap the export opportunities in the regulated markets of US and Europe. The Rudrapur plant, which will employ about 500 people, will take off within two months.

VHB is also planning to set up a drug research and development centre worth Rs 30 crore. It will employ about 50 scientists to undertake new chemical entity (NCE) and novel drug delivery systems (NDDS) research.

Further, VHB is in advanced negotiations to acquire a popular paediatric drug brand which has over Rs 13 crore sales in the domestic market.

Anju Gupta said the company was likely to post a turnover of about Rs 340 crore in 2007 and hopes to achieve a turnover of Rs 1000 crore by 2010, mainly through brand acquisitions and tapping the European and US markets.