ICICI Venture, India's largest private equity player, is looking at selling I-Ven Pharma Capital Limited, a Special Purpose Vehicle, to Dr Reddy's Labs (DRL), its exclusive partner in the SPV.
According to sources familiar with the development, the talks for selling the entire stake to DRL is in advanced stage and the deal will be closed soon. ICICI Venture has invested Rs 100 crore and holds 100% stake in I-Ven Pharma, created in 2005 for the purpose of funding research, development and commercialization of pharma products by DRL for the US market. It was the first deal of its kind in R&D funding in the Indian pharma sector.
Under the pact between them, I-Ven Pharma would pay 50% of DRL’s expenses for the development costs, US Food and Drug Administration (FDA) filing costs and legal expenses for all Abbreviated New Drug Applications (ANDA-filed for marketing approval for generic drugs) filed during the period of the agreement.
Upon successful commercialization of these products in the US market, I-Ven Pharma was to receive a fixed percentage of net sales for five years on each product. Though a portfolio of 35 generic drug products was to be developed as per the agreement, it is yet to be ascertained the number of ANDAs filed with USFDA and the drugs marketed in the US under I-Ven Pharma.
According to the documents from DRL, the first tranche of Rs 98.5 crore was funded by I-VEN on March 28, 2005 and based on product filings, Rs 93 crore has been credited to research and development expense during the years ended March 31, 2005, 2006 and 2007.
An e-mail sent to DRL spokesperson did not elicit any response till now. Vishakha Mulye, MD and CEO of ICICI Venture, declined to comment.
Incidentally, ICICI Venture had another partnership with DRL for Perlecan Pharma, which was formed for in 2005 as a JV between Citigroup Venture, DRL and ICICI Venture for funding R&D activities. In July 2008, DRL purchased the equity holding of Citigroup Venture Capital and ICICI Venture in Perlecan Pharma Private Limited for a total purchase price of Rs 75.8 crore and made Perlecan Pharma a wholly owned subsidiary of DRL.
Perlecan Pharma was engaged in the clinical development and out-licensing of four new chemical entity assets. As a part of this JV, DRL had out-licensed four NCE assets to Perlecan Pharma. However, the drug molecules did not perform well in the human clinical trials, which caused the exit of ICICI Venture and Citigroup VC from the company.
ICICI Venture has been on an exit mode from a few of its portfolio firms. It has exited from diagnostic chain Metropolis Healthcare in a secondary transaction with Warburg Pincus. ICICI Venture had invested Rs 35 crore in Metropolis from its India Advantage Fund Series-1 in 2006 and held around 20-25% stake in the firm.
Last week, Business Standard reported ICICI Venture’s plans to exit from Ranbaxy Fine Chemicals, which was part of Ranbaxy Laboratories and by ICICI Ventures in 2005 for about Rs 125 crore. In June 2009, it partly sold the business, selling the animal healthcare vertical of the company, Vetnex, to global giant Pfizer for about Rs 350 crore. The remaining businesses include diagnostics and fine chemicals. Media reports also suggest that ICICI Venture is likely to offload part of its stake in Arch Pharmalabs through the latter’s IPO expected later this year.
ICICI Venture has made significant investments in the lifescience and healthcare space. Recently, it announced an investment of Rs 120 crore ($27 million) in Star Health and Allied Insurance Company Limited from its latest fund. Its other investments include Vikram Hospitals Pvt Ltd ($24 million), Medica Synergie Pvt Ltd ($16.5 million), Sahyadri Hospitals ($36 million), RG Stone Urological Research Institute ($10 million), Radiant Research Inc., Onconova Therapeutics Inc., Arch Pharmalabs, RFCL, Bharat Biotech, Swiss Biosciences AG. It exited from its investments in Intas Pharma, Malladi Drugs, Biocon, Avesthagen and Medicorp Technologies.