Tata Capital, the finance arm of Tata Group, is set to invest in two healthcare firms through its private equity (PE) arm. Sources privy to the impending transactions said, a healthcare fund of Tata Capital PE will be investing about $8-10 million for minority stakes each in Intas Biopharmaceuticals Limited (IBPL) and VLife Sciences Ltd shortly.

Both these firms already have Kotak Private Equity as investors.

Last year, Tata Capital had announced plans of PE fund-raising for $350-400 million, which will also see an allocation towards setting up a standalone healthcare fund. Vishalakshi Chandramouli, an experienced healthcare analyst, is spearheading the healthcare fund even though the size of the same could not be ascertained at present. She joined Tata capital from Merrill Lynch where she was senior director of India healthcare equity research.

The deals with NovaLead Pharma, the R&D subsidiary of VLife Sciences Ltd, and Intas Biopharma, totaling about $16-20 million (Rs 70-90 crore), will be the first investments from Tata Capital's healthcare fund.

NovaLead Pharma is involved with discovery and development of small drug molecules with multiple mechanism of action for diseases needing better treatments. The candidate pipeline of NovaLead has a mix of new chemical entities and new indications for US Food and Drug Administration (FDA) approved drugs with an addressable market estimated at over $15 billion. Its drug molecule for diabetic wound is in phase II study and expected to hit market in two years. It has an R&D pipeline of about 11 molecules for various diseases such as colon cancer, malaria, leukemia and diabetic cataract.

Email queries sent to Supreet Deshpande, CEO, NovaLead Pharma and to Tata Capital did not elicit any response. Intas Biopharma spokesperson said, “as a company policy, we do not comment on market speculations. Intas Biopharmaceuticals is a fastest growing company and there is lot of interest from the investors to make private equity investment in our company.”

Ahmedabad-based IBPL manufactures biopharmaceutical products with a special focus on oncology (cancer). Kotak PE has invested $10 million into the firm. Intas, which is keen on the US market, had tied up with Apotex Inc. of Canada to develop a biosimilar (copycat version of biotech drugs) of pegfilgrastim, a protein that is used in treatment of cancer. The product has a market of around $3.5 billion. It has out-licensed its four products in all major territories across the globe. Though the opportunity for biosimilars are huge in the US market, no clear regulation has been implemented so far, restraining any company to launch biosimilars in the US. According to Frost & Sullivan, the biosimilars markets in Europe and the USA have the potential to generate sales of $16.4 billion by 2011.

Last year, Akhil Awasthi, a former partner with Baring Private Equity Partners (India), had joined Tata Capital, as the managing partner of its mid-market private equity fund. In July last year, Shailendra Bhandari, the head of Tata Capital's PE business, had quit less than a year after he joined the firm.In February, Press Trust of India (PTI) had reported that Tata Capital is expected to close fund-raising for its $350-400 million private equity corpus within the next six-months, quoting Tata Capital's Chief Financial Officer, Govind Sankaranarayanan.

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