Eight Roads Ventures, the proprietary investment arm of Fidelity International Ltd and its US-based sister fund F-Prime Capital are investing Rs 218 crore ($30.6 million) in the injectables unit of Caplin Point Laboratories Ltd.
The investment in Caplin Steriles will help it cater to the growing demand for injectable pharmaceutical products in the regulated markets, especially the US and Europe, Caplin Point said in a statement.
Caplin Point was founded in 1990 by CC Paarthipan. It sells pharmaceutical formulations in several emerging markets including Latin America and Africa. Caplin Steriles has research and development facilities in Chennai and manufacturing infrastructure that is approved both by the US and European regulators.
“We are expanding capacities to cater to growing demand from these regulated markets for sterile products, and working on development of complex generic injectable products in-house. Both these efforts will unlock great value in the long run,” said Paarthipan.
The investment expands Eight Roads exposure to the healthcare sector in India. It has previously invested in companies such as Cipla Health, Core Diagnostics, Laurus Labs, Medwell Ventures, Pharmeasy and Trivitron Healthcare in the country.
According to the statement, the $10-billion US generic injectables segment is an attractive opportunity, driven by high barriers to entry on product development and regulatory compliance in manufacturing sterile products. This has resulted in relatively lower competition and constrained capacity, it said. Prem Pavoor, partner at Eight Roads Ventures India, said that more than 70% of generic drug shortages in the US is attributable to injectables.
Mumbai-listed Caplin Point’s shares fell 5.35% to end at Rs 402.20 apiece in a flat Mumbai market on Friday. The company reported revenue of Rs 426 crore for the year through March 2018, up from Rs 347 crore in the previous financial year.
The annual turnover of the Indian pharmaceutical industry is estimated to be $33 billion during 2016-17, according to the annual report of the Department of Pharmaceuticals. Exports accounted for about half of this turnover. The industry is highly fragmented with hundreds of small and mid-sized companies.