Claris Lifesciences weighing buyback, dividend

Management may also decide to de-list the firm

Ahmedabad-based Claris Lifesciences is weighing a buyback or a dividend payout after having sold its global generic injectables business to US-based Baxter International.

The management may also decide to de-list the company. Claris Lifesciences has appointed consultants to study compliance issues related to a buyback.

All the 1,200 employees of Claris Injectables would be absorbed by Baxter, a company executive said.

Claris Injectables contributed nearly 80 per cent of the overall revenues of Claris Lifesciences, the remaining came from pass-through sales of Claris Otsuka, a joint venture with Japan's Otsuka Pharmaceutical and Mitsui for the infusion business in India and emerging markets. Claris Lifesciences has a 20 per cent stake in the joint venture. 

Arjun Handa, executive vice-chairman and managing director of Claris Lifesciences, said he wanted to start a fast-moving consumer goods (FMCG) company.

"Dividend attracts a dividend distribution tax. That would logically be the last option for the company," an analyst said. "There is a restriction that a company can not buy back more than 25 per cent of its net worth without specific approvals. At the time of the Otsuka deal in 2012, the company had paid Rs 230 crore for a buyback and Rs 70 crore as dividend," he added.

Nirmal Bang today said Claris Lifesciences should have valuation of Rs 3,300 crore at Rs 600 per share. The brokerage said the buyback price should be Rs 480 a share.

A source in Claris Lifesciences, while admitting the valuation sounded fair, said it was yet to decide on de-listing. "But that is one of the options," he said.

Claris Lifesciences reported net sales of Rs 754 crore in 2015-16 and is aiming at a $5 billion share of the $20 billion global injectables drug market.

Interest in the Indian injectables business is peaking and Baxter was looking for an acquisition for over a year. Hyderabad's Gland Pharma was bought by Chinese drugmaker Fosun in July for $1.4 billion.

Arjun Handa agreed to Baxter’s offer of $625 million because it had also agreed to absorb all the employees.

Arjun Handa and his brother Aditya had joined Claris Lifesciences founded by their father Sushil Handa. The senior Handa moved out of Claris Lifesciences eventually and left it to Arjun. Sushil Handa then co-founded Abellon Clean Energy with Aditya in 2008. Later, Sushil Handa founded a dairy company, Flourish PureFoods.

Arjun Handa said there were no cross-holdings among the companies and that he was not likely to invest in one of the family businesses. His new venture could bear the Claris name.