Home HEALTH Mankind Pharma scouts for M&A deals to boost local branded biz

Mankind Pharma scouts for M&A deals to boost local branded biz

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Mankind Pharma, the fourth-largest pharmaceutical company in the domestic market, is scouting for mergers and acquisitions, in-licensing deals to boost its domestic branded formulation business, the company’s top executive said. The company is evaluating assets including brands to product portfolios, and even large assets.“We want to go for high-entry barrier products, the (acquired) entity should have chronic angle, consumer (healthcare) touch, and it should be margin accretive,” Rajeev Juneja, managing director of Mankind Pharma said in an interview to ET.

Mankind could have a potential war chest of up to ₹20,000 crore through a combination of debt and equity. The board of Mankind last month approved equity fund raising ₹7,500 crore, and also increased the borrowing limits up to ₹12,500 crore. The company has a net cash balance of ₹3,260 crore and negligble debt as on March 31, 2024. “We like to go solo for acquisition, that way, we can fit the (acquired) entity strategically,” Juneja said, The homegrown drugmaker in the past acquired the domestic formulation business of Panacea Biotec for ₹1,900 crore in 2022. It also acquired infant soap brand Daffy and anti-asthma brand Combihale from Dr Reddy’s.

Juneja said both the past acquisitions have worked well for Mankind giving entry into new therapeutic segments like transplant, urology and respiratory. Juneja says sometimes the valuation expectations in the pharma sector are unrealistic.

“On paper you can say anything, you can say the valuation is thousands of crores, in reality it should have some substance,” he said.

“When the diligence is being done, then we come to know the real thing. What is behind that facade,” he added.ET has earlier reported that Mankind Pharma and ChrysCapital are in the race to acquire surgical supplies company Healthium Medtech, owned by private equity firm Apax Partners. The company was subsequently acquired by KKR for ₹7,000 crore.ET had also reported that Mankind is among firms which is in the race to acquire Mumbai-based biopharma firm Bharat Serums and Vaccines (BSV) from PE firm Advent and JB Pharma from KKR. Mankind had called the reports speculative.

Juneja said in-licensing deals are another priority area for the company to bring innovative products.

Mankind has entered into in-licensing agreements with Novartis for heart failure therapy Neptaz. In May, 2024 it signed a licensing agreement with AstraZeneca to distribute inhaled corticosteroid drug Symbicort in India. Indian drug companies are using in-licensing to market and distribute innovative drugs of multinational companies in the Indian market. They pay royalty on sales. The MNCs use licencing to expand access of their products in Indian market using the help of local companies pan-India sales network.

Juneja said they will be soon be announcing another licensing agreement for a novel therapy in cardiac care. “They (in-licensed products) contribute less than 1% in the revenue, but they help in having a foot in the door of the top notch doctor,” Juneja said.

In May 2023, Mankind had a successful IPO, listing at a 20% premium. Mankind had revenue of ₹10,335 crore and profit of ₹1,942 crore in FY24. Domestic revenue accounted for 92% of the total.

As part of its next growth phase, Mankind is focusing on chronic therapies and metro cities, which means realigning the sales strategy to focus on specialists. It is also looking at premiumisation of products for improved margins. It makes about 75% of the products that it sells and is spending more on R&D.

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