Alkem Labs to raise Rs1,500 cr through IPO

Mumbai: Mumbai-based Alkem Laboratories Ltd, a generic drug maker, is looking to raise Rs.1,000-1,500 crore through an initial public offering (IPO), two investment bankers who met the company to discuss fund-raising plans said. “They have not yet decided the exact size of stake sale that would be undertaken by the promoters during the issuance,” said one of the two bankers, both of whom spoke on condition of anonymity.

The second banker confirmed the plans for an IPO.

An email sent to Alkem Laboratories on Friday night elicited no response.

Alkem Laboratories, which began as a health care marketing firm in 1973, had a revenue of almost $500 million and has grown at a compounded annual growth rate of 16% in the last five years, according to the company’s website. Alkem has seven manufacturing facilities and a portfolio of 800 brands.

India’s drugs and pharmaceuticals industry is likely to post total sales of Rs.2.91 trillion ($47.88 billion) by 2018, with an average yearly growth of at least 14%, aided by a rapidly growing domestic market and the newly emerging export opportunities as patents of at least a dozen blockbuster drugs in the US expire in the next three years, according to a report published on 10 September by Care Ratings, India’s second largest credit rating agency.

“During 2014-2016, about $92 billion worth patented drugs are expected to go off-patent in the US, against $65 billion in 2010-12,” Care Ratings said in the report. The domestic drugs industry—valued at Rs.1.6 trillion—is expected to grow with aggressive rural penetration by drug makers, increased government spending on health and growing health awareness among people. The planned IPO by Alkem would be one of the largest public offerings in the pharmaceutical sector since 2011.

“The pharmaceutical index has been one of the top performing ones and we expect more firms to come and raise capital via public market listing,” said Sujay Shetty, leader, pharmaceuticals and lifesciences, PricewaterhouseCoopers India Pvt. Ltd.

The S&P BSE Healthcare index has gained 25.03%, while the S&P BSE Sensex has increased 7.48% in the past one year.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.