top of page

Nirma's 75% Stake Acquisition in Glenmark Life Sciences: A Major Shift in India's Pharma Landscape

On September 21, 2023, Nirma group, the major Indian diversified conglomerate, announced that it had entered into a definitive agreement to acquire 75% of the Life Sciences division of Glenmark Pharmacy, the listed Indian multinational company that sells its pharmaceutical products in 60+ countries. The acquisition, valued at 56.52 billion rupees ($679.84 million), is a significant development with great potential for both Nirma and Glenmark. The Nirma group's advisory team comprised Khaitan & Co, DAM Capital, KPMG, BCG, and Eaishman. Kotak Investment Bank served as the exclusive financial advisor to Glenmark Pharma and Glenmark Life.


Glenmark Pharmaceuticals' decision to sell 75% of its active pharmaceutical ingredient (API) business is driven by two strategic motives. First, the company has been dealing with a significant debt burden for the past decade. The sale will provide Glenmark with much-needed liquidity, allowing it to repay its gross debt of about 46 billion rupees ($555 million) and become net cash positive. The improved balance sheet will allow the company to invest in product development, as it sees market expansion in Latin America, parts of Europe, and India. Secondly, the deal will enable Glenmark Pharmaceuticals to focus on its core therapeutic areas of dermatology, respiratory, and oncology and its business of selling branded drugs. This move will position Glenmark Pharmaceuticals to move up the value chain in the pharmaceutical market and become an innovative brand-led organisation, creating more long-term value for shareholders.


For Nirma, one of India’s largest diversified conglomerates, this acquisition presents an opportunity to expand further into the pharmaceutical industry, one of the world's fastest-growing sectors, with an expected CAGR of 5.90%. Nirma is one of India's most well-known FMCG brands, with an annual turnover exceeding $2.5 billion, and it operates in industrial chemicals, detergents, soaps, cement, and real estate development. The conglomerate has been dipping its toes into the pharma sector since 2006, and in April 2023, it acquired a 100% stake in Stericon Pharma Private Ltd, a contract development manufacturing organisation (CDMO) that produces sterile contact lens cleaning solutions and eye drops. Nirma believes this deal will propel its pharmaceutical business into its next growth phase.


Glenmark Life Sciences is particularly valuable to Nirma because it is a respected name in the active pharmaceutical ingredients (APIs) sector, producing APIs for various drugs that address cardiovascular diseases, pain management, and diabetes. India's API requirements are mostly imported from China, accounting for 70-80%, making the country heavily dependent. The government has been striving to change this situation by encouraging domestic pharma companies to engage in the API game by offering manufacturers incentives. If Nirma acquires Glenmark's API business, it will be able to realise its pharma ambitions, position itself as one of the top five independent API companies in India, and leverage these incentives. This acquisition could also help Nirma bring down drug prices and enable it to implement its affordable pricing strategy.


Following the deal announcement, shares of Glenmark Pharmaceuticals fell by 2% at market opening on September 22. After the stake reduction, the pharmaceutical company will retain a 7.84% stake in Glenmark Life Sciences. The divestment offer is subject to customary conditions precedent, including receipt of shareholder approval and regulatory approval by the Competition Commission of India.


In conclusion, Nirma's acquisition of Glenmark's Life Sciences division is a strategic move that holds significant promise for both companies, poised to drive growth and innovation in the pharmaceutical sector while addressing financial challenges for Glenmark.


Written by: Mehak Mahajan


Sources: Reuters, Economic Times, Bloomberg, Fierce Pharma, Glenmark press release, Money Control


Recent Posts

See All

ChapStick Brand Acquired by Suave Brands Company

On 25th January 2024, Suave Brands Company announced their acquisition of Chapstick for approximately $510 million. Suave Brands Company is currently a portfolio company of Yellow Wood Partners, with

Comments


bottom of page