- Suven Pharmaceuticals is set to acquire a 67.5% equity stake in Sapala Organics, a Hyderabad-based CDMO, for a consideration of Rs. 229.5 crore.
- The acquisition will be completed after FY2026-27, resulting in Suven owning 100% of Sapala’s share capital on a fully diluted basis.
Suven Pharmaceuticals has announced a strategic investment in Sapala Organics, a Hyderabad-based Contract Development and Manufacturing Organisation (CDMO) specialising in Oligo drugs and nucleic acid building blocks. The agreement is subject to regulatory approvals and conditions.
Sapala Organics is a key player in the oligo and nucleic acid building blocks market, which is currently valued at approximately $750 million and is expected to grow at a robust rate of around 20% CAGR. The company’s customer base includes innovator Pharma, other CDMOs, and diagnostic companies, making it a crucial partner in their oligo drug NCE programs.
Suven Pharmaceuticals will acquire a 67.5% equity stake, equivalent to 51% of the share capital of Sapala on a fully diluted basis, for a consideration of Rs. 229.5 crore. This acquisition is subject to customary working capital and net debt adjustments. The remaining equity stake will be acquired a few months after FY2026-27, as per the terms of the definitive agreements. Upon completion, Suven Pharmaceuticals will own 100% of the share capital of Sapala on a fully diluted basis.
Sapala Organics reported a revenue of over INR 670mn and adjusted EBITDA margins of 45%+ for FY24. Suven Pharmaceuticals has agreed to initially acquire a controlling stake, while the existing shareholders of Sapala will continue to hold a significant minority stake for the next few years. Dr Reddy will continue to run the business as the CEO and will also be associated with the Suven+Chance platform as a strategic advisor for the Japan market.
The overall acquisition is expected to be in the range of 13-15x EBITDA multiple and is linked to the next three years’ financial performance. This strategic move by Suven Pharmaceuticals is expected to strengthen its position in the pharmaceutical contract manufacturing sector.
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