GVK Bio plans to invest Rs250 cr in expansion

GVK Bio plans to invest Rs250 cr in expansion

Hyderabad:GVK Biosciences Pvt. Ltd (GVK Bio), an integrated pharmaceutical and biotechnology research and development services provider belonging to the Hyderabad-based GVK Group, has chalked out an ambitious expansion programme that would involve an investment of Rs250 crore.

GVK Bio is a 50:50 joint venture between the GVK Group and D.S. Brar, the former chief executive officer and managing director of Ranbaxy Laboratories Ltd, who now is the chairman of the biotechnology company.

While 60% of the capital expenditure, or Rs150 crore, would go in for organic growth initiatives, the company plans to earmark 40% or Rs100 crore towards acquisitions, both in domestic and overseas markets.

The company proposes to set up an integrated campus in the outskirts of Hyderabad for collaborative research services at an investment of Rs150 crore.

The biotechnology firm is hoping to raise Rs100 crore to partly finance the growth plans. GVK Bio has initiated discussions with three-four private equity (PE) players and expects to finalize the deal by year-end, Brar said. He said the company is currently looking at raising funds from one PE player only.

“We prefer to offer the PE players minority holding in the company by offering not more than 15% holding," Brar told Mint.

The proposed equity placement with PE firms would bring down the holding of GVK Group and Brar to 42.5% each in the company. GVK Bio currently is serving 15 of the top 20 global pharmaceutical companies in their phase II and phase III clinical trials and accelerating their drug discovery and development processes. “We have identified certain key gaps in our service offerings and plan to fill them through organic and inorganic routes," Brar said, adding that most of GVK Bio customers prefer to avail of all the services at a single trusted point. “They keep insisting that we set up the balance services as well, so that they need not approach others for such services."

Some of the key holes in GVK Bio’s services include bio IT, contract development of formulations, toxicology, a full-fledged animal house and screening within biology.

“Our clinical research initiatives require a front-end so that we can participate more actively in some of the global clinical studies," Brar said.

“That is the reason we want to spread to some geographies and have a front-end through acquisition of small-sized clinical research companies." staff writer