Bangalore: France’s largest drug maker, Sanofi-Aventis SA, said on Monday it had agreed to buy a majority stake in Hyderabad-based Shantha Biotechnics Ltd in a deal that values the 16-year-old Indian firm at €550 million (Rs3,778.5 crore).
Paris-based Sanofi’s vaccine unit—Sanofi Pasteur—will buy ShanH, which owns a 78% stake in Shantha, from French vaccine maker Merieux Alliance.
The Indian firm is expected to record $90 million (Rs433.8 crore) in sales in the fiscal year ended March, which Sanofi believes will increase significantly in the near future, given its commercial resources and pipeline of new vaccines. Shantha founder K.I. Varaprasad Reddy said Sanofi Pasteur has agreed to acquire the entire stake of Merieux Alliance.
“I am very happy. Most of my employees have stock options and they are wealthy today… My dream of creating wealth and affordable vaccines has been realized,” Reddy said.
“This demonstrates that intellectual property and good facilities will attract strategic investors,” said Nitin Deshmukh, head of private equity at Kotak Mahindra Bank Ltd.
The deal, which is set to close before the end of the third quarter, is seen as a strategic fit for both Sanofi and Shantha. The French firm would be get a portfolio of new vaccines under development and Shantha would gain access to new technologies and the global market.
Sanofi’s group chief executive Christopher A. Viehbacher said the deal would position his company “to accelerate its growth in strategically important emerging markets”.
The Merieux group acquired a 60% holding in Shantha in 2006 and later raised it to 80%. “During the last three years, we have in particular refocused its (Shantha’s) activity on vaccines and strengthened its range of products,” said Alain Merieux, chairman of Merieux Alliance.
But Merieux was not strong in vaccines and Shantha needed a strategic partner that could take its vaccine programme to a higher level, said Reddy.
So why did he sell it to Merieux in the first place? Early investors from Oman wanted to exit and the Merieux group, among several other suitors, “came closest to Shantha’s business philosophy”, Reddy said.
The new products being developed at the Indian biotech company include rotavirus vaccine for infant diarrhoea, conjugated typhoid vaccine and human papillomavirus vaccine for cervical cancer.
Reddy said he was also happy about bringing together two old French companies that share a common ancestor—both Sanofi and Merieux grew out of Institut Merieux, which was founded in 1897 by Marcel Merieux, a student of Louis Pasteur, the renowned biologist who developed the first vaccine for human use against rabies.