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The former is listed and the latter unlisted.
The two companies boards are likely to hold independent meetings to discuss the possibility of a deal in the coming weeks, according to the sources. There is no certainty a transaction will materialize, they said.
Global private equity firm Carlyle is a shareholder in both companies.
Viyash Life Sciences generated 1.5 x the operating profits of Sequent Scientific in financial year 2023-24, as per the sources.
The two companies are said to be exploring the merger due to possible back-end synergies, according to the sources.Emailed queries to Sequent Scientific and Viyash Life Sciences had not elicited a response until press time.Sequent Scientific which is in the animal health business posted revenues of around Rs. 1400 crore in financial year 2023-24. It had earnings before interest, tax, depreciation and amortization of around Rs. 100 crore. It has seven manufacturing sites in India, Spain, Brazil and Turkey.
Viyash Life Sciences was founded by Hari Babu in February 2019. Babu was the global chief operating officer of the world’s largest generic drug maker Mylan in his previous avatar. Mylan is now known as Viatris after the company merged with Pfizer’s generic drug division.
The company is said to have earning before interest, tax, depreciation and amortization of around Rs. 150 crore.
Viyash has ten manufacturing plants including one in New Jersey, USA.
It is a manufacturer of active pharmaceutical ingredients and formulations for drugs for human consumption.
Sequent Scientific’s sales are evenly split between Europe and emerging markets while Viyash has a growing US presence.
The manufacturing capacity of Viyash could be an advantage for Sequent Scientific.
In February, Suven Pharma announced it was merging with unlisted Cohance Life Sciences to create a stronger contract development and manufacturing organization for human health drugs. Global private equity firm Advent International was a shareholder in both companies.
Private equity firms have had success investing in Indian pharmaceutical companies. Examples include KKR’s investment in Gland Pharma which generated more than two-fold return in a span of three years. It invested $200 million in the company in 2013 and exited in 2016 when the company was acquired by China’s Fosun bagging over $500 million for its stake. Similarly, ChrysCapital invested in Mankind Pharma in 2007 and sold its investment for around $200 million in 2015 realizing a ten fold return on the investment. It re-invested in the company writing a cheque of $350 million in 2018 at a valuation of $3.5 billion when the company was still unlisted. When it finally exited the investment this year, Mankind Pharma was valued at over $10 billion.
Such trends have encouraged the emergence of healthcare-focused private equity firms such as Quadria Capital and Eight Roads Ventures.
