IFC acquires 11.8% in Granules India for Rs 60 cr

MUMBAI: The International Financial Corporation (IFC) has picked up 11.8% stake in Granules India (GIL), a mid-sized pharmaceutical firm, for $15 million (Rs 60 crore).

The Hyderabad-based company plans to use the funds to part-finance its Rs 120-crore expansion projects. GIL’s expansion programme comprises setting up of various tablets plants and its proposed investment in the Chinese joint venture.

Currently, company promoters, C Krishna Prasad and family, holds about 32% in GIL. Though the promoters’ holding will come down to about 21% post-IFC deal, it is likely to go up to 33% after the conversion of some warrants they hold. A few months back, US-based pharma fund, Ridgeback Capital Investments, had picked up 14.78% stake in the company.

GIL is one of the leading contract manufacturing firm supplying high-volume active pharmaceutical ingredients (APIs) and pharmaceutical formulation intermediates (PFI) to the bulk over-the-counter (OTC) drugs industry in the US, Europe, Latin America, Australia and India. GIL has three wholly-owned manufacturing plants in India and one plant in China through a 50:50 joint venture.

Sources said GIL’s expansion programme include a proposed plant to make 6 billion tablets per annum; another plant for paracetamol API with 3,600 tonnes per annum capacity; investment in a JV in China for ibuprofen API with a capacity of 3,800 tpa, and for developing and registration of new products.

Recently, GIL had entered into an outsourcing agreement with Matchland, Australia. Under the agreement, New Products Development will outsource its finished dosage manufacturing requirement to Granules India for the Australian market.

According to a study by the consultancy firm Frost&Sullivan, the contract research and manufacturing services (CRAMS) industry in India is estimated to have earned revenues of around $895 million in 2006. Over the last five years, the CRAMS industry has been contributing close to 8% of the Indian pharmaceutical business.

Factors like a vast expanse of speciality hospitals (nearly 7 lakh hospital beds and 221 medical colleges), large English speaking population and rich talent pool, diverse population, large and diverse gene pool, increasing number of chronic diseases and a combination of diseases characteristic of developing and the developed countries are expected to propel the CRAMS industry to grow at a CAGR 32% from 2006 to 2013, the study said.