Lupin Ltd has agreed to sell its entire stake in Japanese unit Kyowa Pharmaceutical Industry Co. Ltd. to private equity firm Unison Capital Partners for 57.26 billion yen ($525 million or Rs 3,690 crore).
The proposed transaction will generate post-tax net cash inflow of about 32.6 billion yen (Rs 2,104 crore), Lupin said in a statement.
The transaction will be subject to customary closing conditions, including approval by Lupin’s shareholders.
“This transaction is aligned with our vision to focus on our key markets and strategic priorities to achieve sustainable growth in the mid to long-term,” Lupin CEO Vinita Gupta said.
She added that Lupin will use the deal proceeds to strengthen its balance sheet as well as provide growth capital to support organic and inorganic initiatives for its focus markets.
Nilesh Gupta, managing director at Lupin, said the company made a 4.5x on its initial investment in Japan, The Economic Times reported. Financial group Nomura acted as the sole advisor to the deal.
The sale comes after reports earlier this month suggested that the pharmaceuticals major was looking to sell the unit for an enterprise value of around $600 million (approximately Rs 4,293.99 crore).
It also comes after Lupin in August decided to sell its Japanese injectables business and related assets housed under Kyowa Criticare Co. Ltd to a unit of UAE-based pharmaceuticals major Neopharma.
Japan has been Lupin’s third-largest market but has been facing price pressures. For the financial year ended March 2019, Japan contributed 13% to the pharma major’s global revenue. However, the combined revenue of Kyowa Pharmaceutical and Kyowa CritiCare fell 4% in the same year.
Lupin, which is headquartered in Mumbai, has 18 manufacturing facilities across the world in countries such as India, the US, Mexico, Netherlands, and Brazil. It also conducts research in the generics and active pharmaceutical ingredients (API) segment and maintains an intellectual property management group as well.
Indian drug companies continue to remain heavily invested in Japan, which is among the world’s largest pharmaceuticals markets. Firms such as Cipla and Sun Pharma have a large presence in the country.
Japan’s Daiichi-Sankyo also conducted one of the largest healthcare deals in India, with the corporate acquiring Ranbaxy Laboratories from its promoters in 2008 for a value of $4.6 billion. However, in 2014, Daiichi sold its entire stake in Ranbaxy to Sun Pharma in a $4 billion all-share deal.
