Strides Arcolab plans to raise $170-$200 mn for injectables arm; Carlyle, 3i in talks for minority stake: Reports

India’s Strides Arcolab is planning to raise around $170-$200 million as equity infusion into its injectables business through a probable dilution of promotor’s stake.

Strides had recently hired New York-based financial advisory firm Lazard to bring investors on board for its injectables business, with a mandate to raise around $170-$200 million.

Strides has been reportedly in talks with certain private equity funds including Carlyle Group and 3i on offloading substantial minority stake in its injectables business.

Strides’ promoters currently hold a 25.8% stake in Strides Arcolab while institutional investors control 45.51% stake in the company.

The Carlyle Group already has a minority stake in another injectables manufacturer Claris Lifesciences of Ahmedabad, western India.

Injectable product are considered to be a rather safe bet among the generic pharmaceuticals in terms of revenues because these high value products offer less competition due to fewer number of players having capabilities to produce these highly specialised formulations.

Strides’ speciality pharma business is the fastest-growing segment for the group. Speciality pharma business delivered revenues of Rs 300 crore in the calendar year 2008 for Strides registering 5% higher operating profit margin than its pharmaceutical business.

Besides Strides, Indian generic players including Orchid, Wockhardt, Lupin, Claris Zydus Cadila have also achieved capabilities to produce and market injectables which often poses high entry barriers.

Strides has a sterile manufacturing facility in Bangalore, India which is engaged in producing beta-lactams and cephalosporins in multiple dosage forms.

Strides’ facility for non ceph non beta lactam steriles is approved by US FDA, MHRA, TGA, MCC and ANVISA. The facility for beta lactams is approved by MHRA, TGA, MCC and ANVISA.

Strides has capabilities for freeze drying, prefill Syringes, ampoules and vials, penicillins and cephalosporins.

Strides also has four manufacturing facilities in India and Poland with new green-field sites for penems coming up in Brazil. Stride new green-field site coming up in India will include freeze drying, oncology and a hormonal block.

strides has over 40 products licensed in regulated markets and over 20 ANDA filings to add to a strong pipeline of over 80 products in development.

Earlier this month, Glenmark Pharma has also announced that it was planning to launch an initial public offering or sell shares of Glenmark Generics Ltd. to private equity firms to minimise it Rs 19 billion debt burden by the end of March.

India’s leading generic player Cipla Ltd is also planning to raise up to Rs 1500 crore or $175 million by selling shares to institutional investors, reports said.

Similarly, Dr Reddy’s, India’s second largest drug firm, is reportedly in talks with GlaxoSmithKline for a possible trade-off of nearly 5% of the company’s promoters’ stake for an approximate $150 million.

The Bangalore-based Strides also manufactures pharmaceutical formulations in oral dosage forms, including capsules & tablets and softgel capsules.

Strides Arcolab has launched Starflu – the company’s generic version of H1N1 swine flu drug oseltamivir (Tamiflu) in India, recently.

Strides has reported second quarter revenue from operations for the financial year 2009 at Rs.309 crores up 21%, and PAT at Rs. 42 crores against net Loss of Rs. 49 crores in Q2’08. Stand-alone revenue from operations at Rs. 175 crores up 9%, and PAT at Rs.60 crores against net loss of Rs.56 crores in Q2’08.