API assets in India are attracting interest

India's domestic drug firms with active pharmaceutical ingredient (API) assets appear to be attracting interest. A case in point is Mumbai-based generic drugs manufacturer BDR Pharmaceuticals.

BDR, which launched a generic version of the Johnson & Johnson’s (NYSE: JNJ) prostate cancer drug Zytiga (abiraterone) in 2013, and also launched India's first generic midostaurin, used to treat acute myeloid leukemia (AML), had an infusion of funds on January 24.

Private Equity fund Multiples Alternate Asset Management is to invest $100 million to take a 10% stake in  the firm.

In 2018, the entrepreneur promoters of the firm held talks with Carlyle to sell a minority stake, but it did not come to fruition. The drugmaker's portfolio includes COVID-19 drugs remdesivir, favipiravir, molnupiravir and baricitinib in India. It is also the exclusive manufacturing partner of Cipla for remdesivir.

Last month, BDR began manufacturing oral anti-Covid-19 pill Molulife (molnupiravir) in the country, after joining hands with Mankind Pharma.

The company has divided its operations into two companies - BDR Pharmaceuticals International and BDR Life Sciences, dealing with the manufacture of active pharmaceutical ingredients (APIs) and formulations, respectively.

The Indian API industry is set to grow from $11.04 billion in 2020 to $18.08 billion by 2026, at a CAGR of 8.57%. Improvement in API assembling, promotion of its clusters and PLIs are driving the growth of the API market.

Three other PE-led investment platforms have been created specifically targeting the API space in India, while at least half a dozen transactions are in various stages of negotiations, according to bankers and fund managers privy to discussions.

Carlyle Group's $300-million platform with former Mylan India chef executive Hari Babu, Advent's $400-million platform with RA Chem and Hong Asia-focused PE firm PAG's $200-million platform with Samara Capital and CX Partners are all eyeing India's API and generic space.

Data shows M&A and PE transactions in API space more than doubled during 2021 to $800 million compared with $293 million in 2020 and just $30 million in 2019.