PAG-led consortium buys India drug maker

The size of the transaction was not disclosed. According to The Business Standard, the consortium will pay $70-80 million for an approximately 70% stake. Local private equity firms CX Partners and Samara Capital are the other participants in the deal.

Founded by C. Kalaichelvan in 1990, Anjan is a leading supplier of APIs to global pharmaceutical companies – based in the US, Canada, Brazil, and Europe – working on treatments for conditions impacting the central nervous system. The private equity investors see this as part of a buy-and-build strategy intended to create a platform for the development of bulk drug ingredients.

AVCJ Research’s records indicate that local healthcare specialist Invascent Capital invested INR250 million ($5.3 million) in Anjan in 2009. This position has since been exited.

Nikhil Srivastava, a managing director and head of India private equity at PAG, noted that the API industry is growing at an estimated 8% per year. India is one of the three largest producers of APIs and it is seeing faster growth than the global industry.

“By building a platform incorporating exceptional API producers like Anjan, we plan to develop a high quality, diversified portfolio of products with a solid client base and a broad range of technical expertise,” he said.

Private equity investment in India’s healthcare stands at $2.5 billion so far this year, up from $1.5 billion in 2019. Approximately 70% of the capital deployed has gone into pharmaceuticals, with formulation and API companies now said to be transacting at valuations of 15-20x and 7-10x EBITDA, respectively, significantly up from the commonly single-digit ranges of only 3-4 years ago.

Much of the confidence has been attributed to the US Food & Drug Administration (FDA) setting up an Indian office in 2008 and subsequently diving deeper into compliance issues. The agency has issued around 6,000 approvals in India during the past 10 years. The country now has the most FDA-approved drug factories outside the US.

India is now the world’s largest exporter of formulations and the top supplier to the US. However, industry participants expect APIs to attract most of the investment as China’s export dominance in this area is chipped away by the shuttering of polluting plants and global pharmaceutical companies diversify their supply chains. 

PAG is currently deploying its third pan-Asian fund, which closed at $6 billion in late 2018. The firm expects to invest up to $1 billion in India over the next few years and hired Srivastava to lead these efforts. In August, PAG committed approximately $300 million for a 51% stake in the wealth management business of Indian financial services players Edelweiss Group.

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• Topics
• South Asia
• Healthcare
• Buyouts
• India
• PAG
• Pharmaceuticals