Merger and Acquisition

Suven Pharmaceuticals Acquires Controlling Stake in Sapala Organics for Rs 229.5 Crore

• ByStartupStory     |    June 15, 2024

Suven Pharmaceuticals, a leading contract development and manufacturing organization (CDMO) for the pharmaceutical industry, has announced the acquisition of a 67.5% stake in Sapala Organics, amounting to 51% of its shared capital, for Rs 229.5 crore in an all-cash transaction. This strategic move is aimed at enhancing Suven’s capabilities and market reach, particularly in the field of nucleic acid-based therapies.

Sapala Organics, also based in Hyderabad, specializes in Oligo drugs and nucleic acid building blocks, essential components in the treatment of various diseases such as neurodegenerative conditions, respiratory disorders, diabetic retinopathy, and certain cancers. In FY24, Sapala recorded sales of Rs 67 crore and maintained an impressive adjusted EBITDA margin of approximately 45%.

Suven plans to collaborate with the existing shareholders to operate Sapala’s business for the next few years, with the intention of acquiring 100% shareholding in Sapala beyond FY27. During this period, the existing shareholders will continue to hold a minority stake. The complete acquisition post-FY27 is projected to be within a 13-15X EBITDA multiple, contingent on Sapala’s financial performance over the next three years.

Annaswamy Vaidheesh, Executive Chairman of Suven, emphasized the strategic significance of the acquisition, stating, “Nucleic acid based therapy targets diseases at a genetic level and has the potential to help patients immensely and cure previously incurable conditions. With this acquisition, we now have multiple differentiated technology platforms such as ADCs and Oligos amongst others.”

Dr. P Yella Reddy, the CEO of Sapala Organics and a renowned researcher in nucleic acid chemistry, will continue to lead the company. Additionally, he will serve as a strategic advisor for the Suven+Chance platform in the Japanese market. Expressing his optimism about the partnership, Dr. Reddy said, “A strategic partner like Suven, with its wider reach and resources will help to take Sapala to the next level while providing significant growth and development opportunities for Sapala’s employees as well.”

Staedmount Capital Advisors and Banyan Advisory acted as advisors to Sapala for this transaction.

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