PE-backed Shilpa Medicare to acquire pharma firm, pick up 40% stake in another
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Shilpa Medicare Ltd, a Hyderabad-based active pharmaceutical ingredients (APIs) and formulations developer, will acquire one pharmaceutical company and pick up a 40% stake in another.

In a filing with stock exchanges, Shilpa Medicare said that it will fully acquire FTF Pharma Pvt. Ltd, which is involved in the research and development of generic, super generic and value-added generic drugs.

The company will buy FTF Pharma for an enterprise value of Rs 75 crore ($9.8 million at current exchange rate). 

This acquisition – subject to any requisite approvals – will help Shilpa Medicare enhance its research and development facilities, as well as increase its product portfolio, the firm said in the filing.

Set up in 2012, FTF Pharma independently develops medical molecules to a certain stage, before patenting and licensing it to a multinational corporation for further development.

FTF Pharma also provides integrated drug development services to companies in India, Canada, Europe and the US. It reported turnover figures of Rs 22 crore, Rs 33 crore and Rs 31 crore for 2018-19, 2017-18, and 2016-17, respectively.

Auxilla Pharmaceuticals and Research

Shilpa Medicare said that it will also pick up a 40% stake in Auxilla Pharmaceuticals And Research LLP, which was incorporated just last month by partners of Auxilla Pharmaceuticals Partnership, which itself was set up in early 2018.

SML will pick up the stake in Auxilla – which is involved in the reformulation and repurposing of existing drug dosage delivery systems – for around Rs 6 crore ($787,479 at current exchange rate).

The move will help it enhance its own R&D capabilities, as Auxilla also provides such services for the development of injectable solution and suspensions, lyophilised dosage forms, liposomal, microsphere and nano suspension dosage forms.

Shilpa Medicare

The company was set up in 1987 and began operations as an API manufacturer. Its offerings now include solutions for anti-retro virals, fine chemicals, intermediates, herbal products, and speciality chemical products.

According to VCCEdge, the data research arm of Mosaic Digital, Shilpa Medicare reported consolidated net sales of Rs 733 crore for the 2019 financial year, with profit-after-tax figures of Rs 98 crore for the same period.

Shares of the company were trading 0.72% down at Rs 527 apiece at the time of writing this report.

Baring India owned an 8.72% stake, Tano Capital 7.58% and TA Associates 3.7% in Shilpa Medicare at the end of March, stock-exchange data show.

Baring India had invested in Shilpa Medicare in 2010 and Tano Capital in 2012 and 2014. TA Associates invested Rs 172 crore in December 2016.

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