Deal focus: Creador scores as India pharma heats up

Malaysia-based Creador fended off substantial competition for its latest investment, the purchase of an estimated 17% stake in pharmaceutical industry packaging supplier Shriji Polymers for INR2.5 billion ($34 million). Suiters were said to have included Goldman Sachs, Kedaara Capital, and ChrysCapital Partners.

“It’s no surprise that there has been a lot of interest in the deal because you have strong macro tailwinds in the Indian pharma sector and a company with a solid track record for delivering financial results on the back of strong customer loyalty,” says Anand Narayan, a managing partner at Creador. “They’ve not lost a customer for several years.”

The deal facilities and exit for Tata Capital, which has invested at least $8 million in Shriji since 2015 via its healthcare fund. The firm is reportedly selling a 13% interest. Creador is investing via its fourth fund, which recently closed at $570 million. About $360 million of this has been deployed to date.

Creador’s experience in India’s healthcare sector includes investments in drug maker Corona Remedies and hospital operator Paras Healthcare in 2016 and 2018, respectively. Shriji differs from these plays in the sense that it is not primarily targeted at the local market. The company manufactures a range of plastic bottles, caps, blister packs, and products such as specialized applicators for regulated pharma companies, mostly in the US and Europe.

Operations encompass more than 400 production molds across three factories in India, one in China, and one in the US. Output capacity has increased by about 20% a year for the past few years and now tops two million bottles and three million caps a year.

Shriji, like most market-leading players in this space, primarily deals in traditional plastic containers that require little innovation in design. There is, however, a significant focus on new technologies such as compression blow form machinery, injection blow molding, and high-speed injection molding. Three products are currently undergoing initial commercial orders, including novel inhalers, insulin pens, and prefilled, multi-dose syringes that can be safely applied on hard-to-reach parts of the body.

Creador is expected to support the development of similar value-added products, as well as a diversification of the customer base and an expansion of the geographic footprint. There will also be a significant focus on building out local capacity for export by leveraging government incentives under the “Make in India” initiative. But in the immediate term, Narayan sees doubling down on existing markets as the preferred approach.

“We have a lot of opportunities in other regulated geographies that are worth looking at, but we have to decide how we can supply those markets even while supporting our existing customers’ 15-20% growth every year,” he says. “Our strategy has been to service customers well and entrench ourselves in their supply chain. These existing customers are among the top 40-50 global pharma players, so it makes eminent sense to grow with them.”  

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• Topics
• South Asia
• Healthcare
• Industrials
• Expansion
• Trade sale
• India
• Creador
• manufacturing
• Tata Capital