Healthcare-focussed investment firm OrbiMed, which closed its third Asia private equity fund this month, is investing $42.5 million (Rs 276.7 crore) in the active pharmaceutical ingredient (API) unit of Vivimed Labs Ltd.
Vivimed Labs will use the funds to cut debt, optimize its capital structure and expand the capacity of the API business, it said in a stock market disclosure.
The company’s API, or bulk drugs, business is held under UQUIFA, which it had acquired in 2011. UQUIFA contributes around 60% to the company’s consolidated revenue and a higher proportion of operating profit, Vivimed said.
Growth in the API business has been driven by a ramp-up in contract development and manufacturing organisation business, better product mix and higher market share in the generics portfolio, it added.
Vivimed Labs managing director Santosh Varalwar said UQUIFA is poised to grow well ahead of the industry on the back of strategic initiatives and investments committed.
UQUIFA, has three manufacturing sites in Spain and Mexico. Its main customers include Gilead Lifesciences, GlaxoSmithKline, Mylan and Actavis.
The private equity firm has received $551 million in capital commitments for its third fund, OrbiMed Asia Partners III LP.
The new fund will invest across the Asian healthcare industry, with a focus on growth-stage product- and services-oriented companies in China and India.
The third fund is bigger than its two predecessor funds combined. OrbiMed’s second fund closed in 2014 after raising $325 million, lower than its initial target of over $500 million. Its first healthcare fund had raised $185 million.
The PE firm’s recent investments in India include Suraksha Diagnostics, in which it picked up a minority stake last year. Last October, it also made a follow-on investment in Bharat Serums & Vaccines Ltd and backed specialty pharmaceuticals company Eurolife Healthcare.
OrbiMed’s other portfolio companies in India include dental chain Laxmi Dental Export Pvt. Ltd, hospital chain Kerala Institute of Medical Sciences, and mother- and child-care company Surya Children’s Medicare Pvt. Ltd.