World Bank arm International Finance Corporation (IFC) plans to part-fund the expansion programme of Hyderabad-based pharma firm Granules India Ltd, which includes setting up of a greenfield facility for manufacturing APIs (active pharmaceutical ingredients) in Vishakhapatnam, Andhra Pradesh.
The proposed investment would be the fourth by IFC in the company and in the form of debt investment of up to $47.5 million.
Besides the greenfield facility, the company plans to expand existing API and PFI (pharmaceutical formulation intermediates) capacities, including constructing a new block in Bonthapally facility; invest in research and development, quality assurance and quality control and additional warehouse capacity. The R&D investment is to improve its product mix in favour of higher value-added products.
Capital expenditure
A large part of the company’s investment programme is in the form of capital expenditure in India, estimated to cost about $84 million.
“It is proposed to be financed with debt of $68.5 million, including a corporate loan of up to $47.5 million for IFC’s own account and the rest through equity and internal accruals,” the Corporation said in its project disclosure.
IFC had first made a debt and equity investment in the firm in 2007, followed by a Cleaner Production Lending Facility loan in 2009 and a debt investment in 2011 meant for expansion in capacity.
A 30-year-old pharmaceutical company, Granules sells its products mainly in the US, Europe, Latin America and India. It has two API units near Hyderabad and one in Vishakhapatnam, which it acquired from Auctus Pharma in November 2014. The PFIs and FDs facility are in Gagillapur. It has a R&D and manufacturing facility in the US. Also, the company has two facilities under its joint ventures – in Vishakhapatnam and in Jingmen, China, the IFC document said.
On the expected development impact, IFC said the project will “significantly demonstrate how domestic companies use their strong comparative advantages of low cost of production, scale, quality and regulatory compliance to exploit the opportunities that enable them to move up the pharmaceutical value chain in selling to more regulated markets. The project will support the company's expansion enabling wider availability of high quality, low cost drugs in developed and developing markets.”
