Listed pharma player Zydus Lifesciences, erstwhile Cadila Healthcare, has announced the acquisition of Sterling Biotech’s active pharmaceutical ingredients business for a cash consideration of Rs 84 crore ($10 million).
The move comes weeks after Zydus inked an agreement with Temasek-backed food technology company Perfect Day to acquire a 50% stake.
The acquisition is expected to be completed by 31 December, 2024, according to an exchange filing.
VCCircle previously reported that the owners of Sterling Biotech, Zydus Lifesciences and Perfect Day planned to restructure parts of their jointly held venture, including its API and gelatin businesses.
Sterling Biotech’s API business specialises in manufacturing of fermentation-based API products, including Lovastatin, Daunorubicin, Doxorubicin and Epirubicin, at its facility in Masar, Gujarat.
This move aligns with Zydus’s strategy to expand in the fermentation-based API space, particularly as it offers high entry barriers and attractive margin.
Zydus already operates a dedicated fermentation lab focussing on new product development.
However, building a new plant from scratch would be more costly and time-consuming. The acquisition allows Zydus to meet its strategic and commercial goals more efficiently.
According to the exchange filing, Sterling Biotech’s API business reported a turnover of Rs 66.8 crore during FY24 against Rs 67.2 crore the year ago.
The sale of its API business is part of Sterling Biotech’s broader strategy to focus on animal-free protein products.
“The purchaser and the seller will also take a strategic view on the API and gelatin businesses,” Zydus had previously stated following its acquisition of a 50% stake in Sterling Biotech for Rs 550 crore through its wholly-owned subsidiary, last month.
After this restructuring, Sterling Biotech also plans to sell its gelatin business to strategic buyers, VCCircle reported earlier.
Zydus Lifesciences is a global lifesciences company involved in the discovery, development, manufacturing, and marketing of a wide range of healthcare therapies.
Meanwhile, Sterling Biotech posted net sales of Rs 454.8 crore for the year ending March 2024, up from Rs 433.3 crore the previous year.
Shares of Zydus Lifesciences ended 0.4% lower at Rs 1,111 apiece in Tuesday's trade on the Bombay Stock Exchange.