Indian millionaire’s vaccine maker hunts for acquisitions

“I do see vaccine companies coming up on the block whether it could be in India or it could be abroad,” Adar Poonawalla, head of Serum Institute of India Pvt. Ltd., said in an interview in the company’s headquarters in Pune, India. “This is the lull before the storm. You are going to see either acquisitions or mergers.”

Poonawalla declined to say which companies he expects to come up for sale but added in an e-mail that no other single vaccine company in the developing world would be worth more than $1 billion and so he doesn’t foresee having to spend more than that for an acquisition. Serum was founded by Poonawalla’s billionaire father, Cyrus, who is chairman and India’s seventh-richest man with a fortune of $9.7 billion, according to the Bloomberg Billionaire’s index.

Smaller companies with fewer products and less financial flexibility will become forced sellers as too many players and depressed vaccine prices cause an industry shakeout, Poonawalla said in the interview. His company scrapped plans to sell 5 to 10 percent of his firm to private equity investors last year at a $12 billion valuation in part because the acquisitions he needed the funds for were taken off the market, he said.

As low vaccine prices from a flood of new entrants continue taking their toll he expects more opportunities next year, and would be willing to sell a larger stake in his firm along with debt to take advantage, he said. Selling a stake in closely-held Serum to private equity would likely mean a share sale on the public markets five to six years after, he said, adding that he believes the company has the ability to raise up to $3 billion through debt and equity.

Falling prices for certain generic vaccines, some of which have dropped as much as 60 percent, will cause Serum’s own profits to dip by as much as 20 percent this year from last year’s approximately $250 million, Poonawalla said. A pipeline of new vaccines the company is developing for release in the next three to five years, including ones that fight pneumonia, the diarrhea causing rotavirus, and rabies, will boost profits to double last year’s levels, he said.

“You’re going to see very soon companies walking out of the business because of the competition, or being acquired, or being merged,” he said. “These other smaller vaccine companies, which are basically one or two product vaccine companies, they’re not going to be able to sustain.”

Also Read 

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Bloomberg 

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.