InvestorQ : Is it true that private equity funds are taking a sudden interest in Indian pharma stocks?
vidhya Laxmi made post

Is it true that private equity funds are taking a sudden interest in Indian pharma stocks?

Answer
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sarah Leo answered.
3 weeks ago


That is absolutely true. In fact, there have been a slew of deals in the last few months where large reputed PE funds have taken a controlling stake in focused pharma plays. There seems to be a surge in interest in the API and CRAMS business from global PE funds.

Let us look at the actual data. The surge in PE deals in the pharma sector is dominated by the active pharma ingredients (API) space and the contract research and manufacturing services (CRAMS) space. These are seen as the big growth areas with low risk quotient.

Consider these deals. Advent International bought controlling stake in RA Chem Pharma for an undisclosed amount. Another globally reputed PE fund, Carlyle, paid $490 million for 20% in Piramal Pharma. Carlyle also paid $210 million for a stake in Sequent Scientific.

KKR infused $611 million into JB Chemicals while True North infused $100 million into Biocon Biologicals. Clearly, the PE funds are looking at CRAMS and API as the next big opportunity baskets in the Indian pharma industry.

With Chinese supply dwindling, India’s strength in APIs and CRAMS has caught global fancy. The COVID-19 pandemic has underlined their importance. Nearly 50% of the contract manufacturing operations or CMO in India pertain to pharmaceutical APIs alone.