French drug maker Sanofi-Aventis will pick up a controlling stake in unlisted Hyderabad-based vaccine maker Shantha Biotechnics, making it the first big-ticket deal in the Indian biotech sector.
Sanofi?s vaccine unit, Sanofi Pasteur, will acquire a subsidiary of French bioindustrial group Merieux Alliance, ShanH, which owns a majority stake in Shantha Biotechnics. The transaction, set to close before the end of the third quarter, values the Indian company at 550 million euros or $783 million (Rs 3,770 crore).
A statement by Sanofi Pasteur said it ?will support Shantha?s ongoing development as a platform to provide high quality vaccines in the international markets?. Alain Merieux, chairman of Merieux Alliance, will chair the new management structure at Shanta, while founder Varaprasad Reddy will continue as managing director.
Shanta, which expects sales of around $90 million (Rs 432 crore) this financial year, has introduced Shanvac-B, the recombinant Hepatitis B vaccine?the first genetically engineered healthcare product in India. Its other products include Shantetra, a combination vaccine for diphtheria, pertussis, tetanus and Hepatitis B. The company supplies vaccines to Asia-Pacific, Africa and Latin America.
According to a Reuters report, Merieux Alliance had bought 60% in Shanta in 2006, which it later raised to 80%. Earlier this year, there were reports that both Sanofi and UK?s GlaxoSmithKline were vying for control of Shantha via Merieux Alliance.
According to a report by CII and consultancy firm KPMG, the Indian biotechnology sector is projected to become a $5-billion industry by 2010. The report says the sector has tremendous potential and that ?India is ranked among the top 12 biotech destinations in the world and is the third biggest in Asia-Pacific in terms of the number of biotech companies.? Investments, which have been growing at 38% for the last three years, touched $560 million in 2006-07.
Commenting on the agreement, Sanofi-Aventis CEO Christopher A Viehbacher said Shantha would provide a portfolio of new vaccines that will complement Sanofi Pasteur?s current vaccines, positioning the company to accelerate its growth in strategically important emerging markets.
Meriuex Allaince chairman Alain Merieux said in a statement: ?During the last three years, we have, together with Dr Varaprasad Reddy, Shantha?s founder, significantly developed the company. We have in particular refocused its activity on vaccines and strengthened its range of products, especially by successfully launching a pentavalent pediatric vaccine as well as a cholera vaccine.?