M&A: Eris Lifesciences Ltd acquires 51% stake in Swiss Parenterals for Rs. 637.50 Crores

Transaction:

• Eris Lifesciences Ltd., a leading Indian branded formulations company, today announced the expansion of its Sterile Injectable footprint through the acquisition of 51% equity stake in Swiss Parenterals Ltd. for a consideration of Rs 637.50 Crore. This deal also marks the entry of Eris into the RoW Export Markets.
• Eris’ Promoter group will concurrently acquire an additional 19% in Swiss for Rs 237.50, thereby bringing the total equity stake of Eris and its Promoter Group in SPL to 70%.
• Out of the deal consideration of Rs 637.50 Crore for Eris’ 51% stake, Rs 200 Crore will be paid at Closing and the remainder will be paid 12 months from Closing.
• Eris will also issue 8% secured redeemable non-convertible debentures valued at Rs. 437.5 Crore for 40% of SPL’s equity shares through a private placement.

About Eris Lifesciences Limited:

• Eris Lifesciences Ltd is a publicly listed Indian pharmaceutical company with a pure-play domestic branded formulations business model.
• Ranked #21 in the IPM, Eris has established a leading presence in its core cardio-metabolic franchise in just 16 years from inception.
• Eris is also successfully diversifying its business with 3 emerging therapies (Dermatology, Neuropsychiatry and Gynecology) accounting for 26% of its revenue.

About Swiss Parenterals Limited:

• With a 25+ year legacy, Swiss Parenterals Ltd. is a leading player in the sterile injectable business in 80+ emerging markets across Africa, the Asia Pacific and Latin America.
• It has two facilities in Gujarat capable of manufacturing a wide range of sterile injectable formulations; these facilities are accredited by 50+ regulatory authorities worldwide including the EU-GMP, Brazilian Anvisa, Mexican Cofepris and the Australian TGA.
• With a portfolio of 1,000+ dossiers across 190+ molecules, Swiss works with a wide range of distribution partners across its target markets.

Rationale:

• The acquisition of Swiss Parenterals will help Eris to strengthen their India footprint through the launch of a domestic Injectable-focused Branded Formulations business.
• In addition to investing to grow the Swiss Parenterals business further, Eris will kick start exports of Oral solid dosage formulations from Eris’ manufacturing facilities to various semi-regulated markets by leveraging Swiss’ overseas distribution channels and regulatory expertise.
• Eris reported a 1% increase in its consolidated profit after tax (PAT) at Rs 102.70 Crore for the third quarter ended December 2023.It had reported a PAT of Rs 101.90 Crore in the year-ago period.Its revenue rose to Rs 486 Crore from Rs 423 Crore in the October-December quarter of 2022-23.
• The company’s earnings before interest, taxes, depreciation and amortization (EBITDA) came in at Rs 175.5 Crore, as compared to Rs 137.2 Crore in the year-ago period.
• Swiss Parenterals had a turnover of Rs 280.30 Crore in FY 22-23.
• In November last year, Eris announced purchasing the nephrology and dermatology segments of Biocon Biologics Ltd.’s branded formulations business in India for Rs 366 Crore.
• Eris has previously entered new therapies through acquisitions. It entered neuropsychiatry in 2017 through the acquisition of Strides Shasun’s domestic business, and dermatology in 2022 through the acquisition of Oaknet Healthcare, followed by brand portfolios from Glenmark and Dr. Reddy’s in early 2023.
• The company is also enhancing its R&D efforts, currently having over 25 active fixed-dose combination candidates under development. Additionally, the insulin business is scaling up, currently generating a monthly revenue rate of Rs 5 Crore.