Syngene will acquire a Unit 3 biologics manufacturing facility in Bengaluru from Stelis Biopharma Limited (SBL) on a slump sale basis for a gross value of ₹702 crore.
The companies have entered into a binding term sheet. According to Syngene, the facility, which was initially built to manufacture Covid-19 vaccines, is now being repurposed to manufacture monoclonal antibodies, and Syngene will further invest up to ₹100 crore to repurpose and revalidate the facility.
The latest acquisition will add 20,000 litres of installed biologics drug substance manufacturing capacity for Syngene. Additionally, the site has the potential for future expansion up to a further 20,000 litres of biologics drug substance manufacturing capacity. It also includes a commercial scale, high speed, fill-finish unit—an essential capability for drug product manufacturing.
Subject to closing adjustments, the consideration for the transaction will be settled in cash. The transaction has been approved independently by the respective Boards of Directors of both companies. The transaction is expected to close within 90 days, subject to customary conditions, including receiving the required lender and regulatory approvals.
Also read: Syngene’s net income rises by 31% to ₹994 crore in Q4FY23
“This acquisition strengthens our growing position as a leading biologics contract development and manufacturing service provider and adds drug substance capacity and a drug product capability years earlier than our internal capex program. We expect this facility to be operational in 2024, following the completion of a programme of facility upgrades and re-validation,” said Jonathan Hunt, Managing Director and CEO.
The facility covers both drug substances and drug products, with an installed capacity of 10 bioreactors of 2,000L along with associated infrastructure and utilities. The facility also includes 10 additional uninstalled bioreactors - providing the potential for future expansion - and two high-speed fill-finish lines.
“This acquisition effectively replaces an internal capex investment program planned for the next three years and will be fully funded through internal accruals and cash. As we ramp up utilisation, we expect asset turnover to grow to 1x in less than 5 years, with EBITDA margins expected to be in line with the Company average from FY29,” said CFO Sibaji Biswas.
The acquisition will not materially impact the current financial guidance given for FY24. In the short term, the company expects a minor dilution of operating margins as a result of costs to be incurred in this facility. It expects the plant to positively contribute tothe bottom line in FY27, the CFO added.