Carlyle-backed SeQuent, Viyash Life Sciences announce Rs 8,000 crore merger

Rs 8,000 crore merger will create one of the largest animal health companies in India

Carlyle-backed animal health company SeQuent Scientific and Viyash Life Sciences have announced a Rs 8,000 crore merger to create a platform, which will be one of India’s largest in animal pharmaceuticals.

“To continue to deliver differentiated value to our customers in times to come, it is imperative to scale up our product development and research and development (R&D) capabilities to capture the market opportunity we are seeing and to build on our leadership in the animal health market,” said Sequent Chief Executive Officer Rajaram Narayanan.

Viyash founder and CEO Haribabu Bodepudi, who was chief operating officer of global drug major Mylan (now known as Viatris), said: “With our combined resources, R&D capabilities, manufacturing capacities, and streamlined supply chain, we are well positioned to accelerate growth and offer a wider range of high-quality products to our customers.”

 

A senior analyst who tracks SeQuent told Business Standard the merger would not have an impact on the Indian animal health industry because Viyash makes human active pharmaceutical ingredients (APIs).

In 2023 the global animal pharmaceutical market was valued at $38 billion, and is projected to grow at around 8 per cent and touch $51 billion by 2027.

The Indian animal health market, on the other hand, was valued at Rs 8,000 crore in 2023, and expected to touch Rs 16,000 crore by 2032.

The combined entity will have access to global markets (over 150 countries) with strong R&D, intellectual property and product development capabilities, and 16 state-of-the-art manufacturing facilities.

SeQuent makes APIs, finished dosage formulations, and analytical services for the animal health industry spanning Europe, Turkey, Brazil, and India.

It ranks among the top 25 animal health enterprises globally.

Viyash has nine plants, including one in New Jersey. It makes APIs and formulations for drugs in human health.

The entity will have a five times higher R&D talent pool and nine times more manufacturing facilities approved by the United States Food and Drug Administration.

Viyash supplies intermediates for one key API that SeQuent makes for the United States market. Leveraging each other’s global customer base, technical skills as well backward integration and procurement synergies would aid growth, industry insiders say.

In June Bhavesh Gandhi of YES Securities had noted SeQuent was upbeat on its API business, and in the formulations business too the company was expecting growth after a period of disruption owing to macro factors.

Domestic business (which was impacted by the stoppage of Zoetis product distribution) is also expected to do better.

Carlyle group portfolio companies have announced the swap ratio for the merger -- Viyash shareholders to get 56 equity shares of SeQuent for every 100 Viyash equity shares.

The new shares of SeQuent will be traded on the National Stock Exchange and BSE. This will result in the capital base of SeQuent expanding from 240 million shares to 428 million shares.

The promoter and promoter group’s shareholding will be around 62.4 per cent in the combined entity.

Based on Thursday’s closing price (the scheme of arrangement was announced after market hours on Thursday), the value of the combined entity with expansion in its capital base will be around Rs 8,167 crore. Shares of Sequent were up 14 per cent on the BSE, ending the day’s trade at Rs 217.35 apiece. The valuation of the company thus increased to Rs 9,323 crore on Friday.

Some key players in this space include Indian Immunologicals (which makes animal vaccines), Hester Biosciences, Virbac Animal Health, Zoetis India etc.

In FY24 SeQuent reported revenues of Rs 1,369 crore, marginally down from Rs 1,420 crore in FY23. It reported a net loss of Rs 29.6 crore in FY24 compared to Rs 122 crore in FY23.