Shantha Biotechnics may forge stake sell-off deal in 2 weeks; GSK emerges top on buyers’ list

India’s Shantha Biotechnics could make it public a deal announcing stake sale possibly to a foreign suitor in a couple of week’s time, as the company’s majority share holder  BioMerieux SA expressed willingness to sell its holdings in the biotech firm, sources  tracking the negotiation process
said.

Talks on a possible sell-out of stake in the Hyderabad, south India-based Shantha Biotechnics has been going on for quite some time.

Now the decks have been cleared as the French firm BioMerieux SA willing to sell at least half of its holding in the recently acquired Indian vaccine maker Shantha Biotechnics.

BioMerieux Alliance bought a 60% holding in the Indian biotechnology firm in 2006 and later raised it to 80%. As of today, BioMerieux controls the majority – 80% – stake in Shantha Biotechnics.

However, BioMerieux SA is unlikely to consider selling its entire stake in Shantha Biotechnics at this point of time because it may want to retain a minority stake with veto rights in the firm, according a report in a French daily Les Echos.

BioMerieux could get between 280 million euros ($400 million) and 420 million euros for the stake, the newspaper said.

Among the potential buyers, GlaxoSmithKline Plc is currently in the forefront. The British drug giant GlaxoSmithKline, which sees a synergy in augmenting its vaccine portfoilo with that of Shantha Biotechnics, is in advanced stages of negotiations to finalise a deal. GlaxoSmithKline targets a 51% stake from BioMerieux in Shantha Biotechnics, reports said.

Novartis AG and Sanofi-Aventis SA, and a number of other companies and universities are reportedly in talks with BioMerieux for the stake buy.

“Merieux Alliance has been contacted many times by different international vaccine companies. There is nothing new on this topic and Merieux Alliance has no comments to add, ” the French company was quoted as saying.

Analysts estimate the current value of BioMerieux holding in Shantha Biotech at Rs 1,000-1,200 crore.

The original promoter of Shantha Biotechnics KI Varaprasad Reddy with about 17% stake – who is also the firm’s managing director – had earlier denied
reports that Shantha Biotechnics was planning to sell out stakes. But Shantha Biotechnics was open to partnerships with companies and universities
to strengthen vaccine development and manufacturing base and reach new markets, he said.

According to Mr Reddy Shantha has emerged strong as a low cost, high quality vaccine maker and was growing in both products and markets.

With estimated sales around Rs 200 crore, Shantha Biotechnics was the first Indian firm to develop and market a recombinant hepatitis B vaccine (Shanvac- B) in 1997. It has a range of vaccines in India and global markets.

Shantha is currently focusing on the development of generic biologicals, novel therapeutic antibodies, proteins and vaccines. Shantha also conducts exploratory research in the fields of oncology, infectious diseases and platform technologies.

Shanvac- B is the first Indian hepatitis-B vaccine to be pre-qualified by WHO, Geneva, for supplying to UN agencies globally.

Shantha caters to major international markets including Asia-Pacific, Africa, CIS and Latin America in addition to supra nations like UNICEF and PAHO.

Shantha has also obtained WHO-Geneva Pre-qualification for its combination vaccine of DPT+ Hepatitis-B vaccine  Shantetra, enabling supplies to UN Agencies. It also provides contract research and manufacturing services and has a wholly-owned subsidiary in the US.