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Healthcare focused private equity firm Quadria Capital along with its co-investors, including Gulf Islamic Investments, has committed over $100 million for a minority stake in Encube Ethicals, a manufacturer of topical drugs, said a senior executive of the company in an interaction with Mint.

As part of the Quadria investment the existing investor of the company, PE firm Multiples Alternate Asset Management has exited the company. Kotak Mahindra Capital acted as the exclusive sell-side advisor to the company and sellers.

Founded in 1998, Encube is engaged in contract development and manufacturing of topical formulations for a global customer base. The company has a strong focus on research and development and has successfully developed and launched multiple own products in regulated markets.

“The investment by Qaudria and their associates is going to be in excess of $100 million for a minority stake. Multiples is exiting and we are doing some primary also for growth capital for the coming years," said Mehul Shah, Encube’s founder and managing director.

The company will be using the capital raised for expansion of its manufacturing footprint, to expand and invest more into complex generics, to enter into the other markets and also look for inorganic opportunities.

The company reported a consolidated revenue of around Rs550 crore in FY21 and aims to increase this fourfold in the next five years.

“In the last more than one and a half years, we have launched 13 products in the US market and many more are in the pipeline. Our aim is to be one of the top players in the topical generics in the US and then get into the other geographies leveraging those assets. Although we are exporting to more than 20 countries, the primary markets are India and the US," said Shah.

For Quadria, Encube’s global presence and high sectoral growth combined with high entry barriers made the company an attractive bet, said Amit Varma, managing partner and co-founder of Quadria Capital.

“What people don't realize is that after biosimilars, the topical pharma industry is actually the one which requires a huge amount of sophistication. And it's very hard to replicate. Encube actually has the capability of CDMO, FDA regulated worldclass single site in Goa, which is one of the world's largest manufacturing plants, but more importantly is in the space of branded generics. We believe that the generic derma topical market is going to grow at a very rapid pace, because of increased prevalence of skin diseases, and more importantly, in the emerging market, the FDA is pushing for affordable generics," said Varma.

“In Encube, you have a company, which is an established CDMO player and has a strong R&D presence, and has a pipeline of three to four years of branded generic products."

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