Mankind Pharma to lead in Indian women's health market after BSV deal

New Delhi-based pharmaceutical major Mankind Pharma is poised to take pole position in women’s health portfolio in the India Pharma Market (IPM) after completing the Rs 13,630 crore deal to acquire Bharat Serums and Vaccines (BSV), senior company officials said.

The deal potentially opens doors for Mankind Pharma to the overseas markets, which currently draws 92 per cent of its revenues from India.

The combined entity will draw around 13 per cent revenues from the international market, with the remaining coming from the domestic market.

BSV draws around 46 per cent of revenues from international markets, with the remainder from the Indian market.

Rajeev Juneja, vice-chairman and managing director, Mankind Pharma, said BSV's portfolio allows them to enter the branded international business with products that have a high entry barrier or are considered superspeciality.

“In some products, we would be the only ones in the market, while in others, there would be limited competition of one or two players," Juneja said.

The deal is expected to be closed in three to four months and will be funded through internal accruals and a mix of debt and equity.

“Around Rs 4,000 crore will be raised through internal accruals, the balance will be raised via debt,” Juneja said in an analyst call on Friday.

The transaction value translates to 22 to 23 times the estimated earnings before interest, tax, depreciation, and amortisation (Ebitda) for FY25.

Analysts have, however, noted that the deal valuation is fair.

“Considering access to a high-entry barrier business, a healthy mix of domestic and international segments, and potential for sustainable Ebitda growth, a 27 per cent Ebitda year-on-year (Y-o-Y) growth in FY25, we believe the deal valuation is fair.

"Free cash generated from the base business would subsequently lower the debt for Mankind,” Motilal Oswal analysts said.

Stating that the BSV acquisition is in line with Mankind’s stated acquisition thesis of brands in the high entry barrier business with a long runway for growth, Juneja said.

BSV is ranked number one or in the second spot in nine of the top ten fast-growing brands with limited competition in India.

“For FY24, it has a reported consolidated revenue of Rs 1,723 crore, delivering a robust 20 per cent Y-o-Y growth,” he added.

Officials added that BSV would complement Mankind Pharma whether it is a high-end superspeciality and high entry barrier products, backed with strong research and development (R&D).

“This acquisition is not to really add some kind of revenue, but to add value, future growth in high entry barrier and superspeciality business,” Juneja said.

Officials also expect that the deal would have a positive effect on the company’s finances, with sustained double-digit topline and Ebitda growth.

The deal will also lead to an accretion of earnings per share (EPS) from the second full year onwards, with synergy benefits to accelerate the EPS accretion.

Juneja added that with this agreement, Mankind would become number one in the women’s health care portfolio in the IPM.

In its official statement after announcing the deal on Thursday, Mankind Pharma had said that this strategic move would mark a significant leap for the company, positioning it as a market leader in the Indian women's health and fertility drug market alongside access to other high entry-barrier products in critical care with established complex R&D tech platforms.

BSV is a leading branded speciality pharma platform in women’s health and critical care with huge opportunities in both India and international markets.

The biopharma major has one brand with over Rs 100 crore in sales in FY24, and three brands, with FY24 sales ranging between Rs 50 crore to Rs 100 crore.

Its women's health portfolio has products ranging from fertility drugs to post-pregnancy therapies.