Business

Laurus to buy Richcore in biotechnology foray

Drugmaker Laurus Labs on Wednesday said it had agreed to acquire a 72.55% stake in Richcore Lifesciences for ₹246.67 crore, marking its foray into the biotechnology segment.

Laurus said it had signed definitive agreements for the stake with venture capitalists (VCs) Eight Roads Ventures and VenturEast, from whom Richcore had raised early and growth-stage funding.

The Bengaluru-based Richcore has large-scale fermentation capabilities and manufactures animal origin -free recombinant products. These products help vaccine, insulin, stem-cell based regenerative medicine and other biopharma firms eliminate dependency on animal and human blood-derived products and in turn, produce safer medicines, Laurus said.

The acquisition will “give us entry into high-barrier biotechnology segment,” said Laurus CEO Satyanarayana Chava. “Laurus will bring scale to Richcore’s operations and can become a major player in biotech.”

He said Richcore’s expertise in enzyme development for pharmaceutical and other industrial applications will help Laurus become a leader in biocatalysis. Post the transaction, expected to be completed in 4-5 months, Richcore will become a subsidiary and renamed Laurus Bio. The current promoters led by Subramani Ramchandrappa will continue to be in the executive board and run the operations.

Richcore, which has a manufacturing facility in Bengaluru with a fermentation capacity of 1,750 lts, is setting up another facility in Tumkur. The second facility will have a fermentation capacity of 180,000 lts and that is expected to be completed by March. The firm, which has been valued at ₹340 crore, registered a turnover of ₹41.4 crore in 2019-20 and in the previous fiscal ₹23.03 crore. For the first six months of current fiscal, the turnover was ₹29.26 crore.

Laurus cited entry into a high growth segment, diversification of revenue base, ability to scale operations and become vertically integrated biotech company as also an increased demand for fermentation capacity reasons driving the acquisition. Richcore also helps customers develop and scale-up their bioprocesses by providing contract research, development, and manufacturing services.

For Laurus, which had recently announced plans for Rs.300 crore Formulation facility in Hyderabad, biotechnology will be the fourth revenue stream. API, Formulations and Synthesis are the others. It planned to fund the acquisition from internal accruals, the company said.

Mr. Ramchandrappa said “Richcore and Laurus Labs coming together marks convergence of biotechnology and chemistry faculties. Leveraging the synergies, we plan to build scale as we continue to serve our existing customers and enter new biotech segments.”

Partner and Head of India of Eight Roads Ventures Prem Pavoor said “we are proud to see two of our partner companies come together to create the beginnings of a global lifesciences leader. There has been a distinct upsurge in demand for biologics and vaccine manufacturing as well as a move away from animal-derived biologic products over the past few years and now accelerated by the COVID-19 pandemic.”

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Printable version | Jan 26, 2021 8:56:03 AM | https://www.thehindu.com/business/laurus-to-buy-richcore-in-biotechnology-foray/article33178843.ece

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