MUMBAI: South Africa’s second largest drug maker Adcock Ingram is in advanced talks to sell part of its India business to Oaknet Lifesciences, an entrepreneurial venture set up last year by RS Raghav, a former Lupin executive.
US-based venture capital fund New Enterprise Associates is also holding separate discussions with Adcock for a possible deal. If the transaction goes through, Oaknet will possibly be backed by Samara Capital, people familiar with the matter told ET. South African financial adviser First Rand is believed to have the mandate to look for prospective buyers.
Oaknet did not respond to queries from ET till press time. A spokesperson for Adcock Ingram in South Africa said the company had no information to share at present. Adcock Ingram has an established partnered manufacturing unit near Bengaluru but its commercial debut was through the $86 million (Rs 480 crore) acquisition of the Goa-based Cosme Farma back in 2012.
At present, the deal may be valued at less than half the price that Adcock had paid for Cosme.
Last August, Adcock Ingram had put the formulations business on the block describing it is as “sub-scale” and one that needed more investments. The Adcock Ingram board of directors concluded it was difficult to operate in the competitive Indian market while moving forward with its decision for a sale process. Earlier reports had suggested PE players such as Kedaara, Carlyle and Multiples Alternatives had expressed interest in the non-binding round of the sale process.
Cosme has a broad portfolio of products across therapies such as paediatrics, orthopaedics, anaemia and gastroenterology but the most attractive piece of the portfolio is its skincare brands. In 2015, the firm recorded sales in the range of Rs 150 crore, which mostly showed a flattish y-o-y growth, market sources informed. Experts believe Adcock has 60 to 70 brands but a few skincare products may fetch good margins and if managed efficiently, those can gain a nationwide scale,” one industry investment banker noted.
According to a senior marketing executive, one of the biggest challenges to concluding a deal for Adcock Ingram is its large field force of around 900 medical representatives.