Indian vaccine producer Biological E is in discussions with global private equity (PE) investors General Atlantic, and TA Associates, among others, to raise up to $250 million by selling a minority stake in the company, two people familiar with the matter said.
Biological E, which has a partnership with Johnson & Johnson (J&J) to manufacture one billion doses of covid vaccines, including a single-dose vaccine developed by J&J, is now valued at $1 billion, they said. “Global PE funds such as General Atlantic and TA Associates are in talks to pick up a minority stake,” one of the persons said seeking anonymity.
The second person said the company has appointed investment bank Goldman Sachs to find an investor. “A part of fresh capital will go towards retiring some debt,” the person added.
Earlier, The Economic Times reported that Biological E was seeking to raise funding from PE firms to finance its plans to hive off its vaccine business.
The company was founded in 1953 by Dr D.V.K. Raju and Dr G.A.N. Raju. It operates in two segments—vaccines and pharmaceuticals—and is now being run by Mahima Datla, daughter of Vijay Kumar Datla, the company’s former chairman and managing director who passed away in 2013.
A majority of the company’s revenue comes from vaccine exports, primarily to the institutional segment. Its pharma portfolio includes mature and strong brands for the domestic cough, cold, anti-coagulant, anti-venom and gastrointestinal segments. It is also present in regulated markets with a complex generics and injectables portfolio.
Queries sent to spokespersons of Biological E, General Atlantic, TA Associates and Goldman Sachs did not elicit a response till press time.
Biological E is the first company in India to manufacture certain critical vaccines (such as anti-tuberculosis and heparin), the largest manufacturer of the tetanus vaccine with a more than 80% market share globally, a leader in snake antivenom in India, and the leading liquid pentavalent vaccine supplier in the world.
According to a November 2022 ratings release by credit ratings agency Icra, Biological E is likely to see traction in the vaccine and pharmaceutical segments, going forward.
“The company witnessed 72% year-o-year revenue growth in FY2022 backed by covid vaccine revenues and improved traction in the existing business segments, led by an uptick in the newly launched vaccines/products and healthy order flow for key vaccines such as typhoid conjugate vaccine (TCV), measles and rubella (MR) and liquid pentavalent vaccine (LPV),” Icra said.
Biological E’s operating margins stood at 24.5% in FY2022 (24.8% in FY2021), aided by margin-accretive covid revenues and improving scale of the existing business.
The company developed India’s first indigenous RBD2 protein subunit covid-19 vaccine, Corbevax, and received Drugs Controller General of India’s authorization for emergency use during December 2021-April 2022 for all age groups above five years. As per the government’s purchase orders, the company supplied around 50 million doses during February-March 2022 and an additional 50 million doses in April that year.
Biological E has a minimum revenue offtake from J&J’s covid vaccine contract manufacturing arrangement spread over two fiscals (FY23-24). The company’s operating income grew to `2,556.8 crore in FY22 from `1,483.3 crore in FY21, while profit after tax rose to `337.2 crore from `182.6 crore.
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Updated: 31 Jul 2023, 12:26 AM IST