We aim to be one of India's top CDMO, API players: Advent's Shweta Jalan

Advent PE is set to pick up a 50.1 per cent stake from promoters Jasti family, and will launch an open offer for another 26 per cent from public shareholders. Advent plans to merge Suven with its portfolio company Cohance and will focus on making it a $1-billion contract development and manufacturing organisation (CDMO) in India. Cohance Lifesciences, wholly owned by Advent, was formed in November 2022 to create a new brand identity for its CDMO and API platforms. In an interaction with Sohini Das, Shweta Jalan, managing partner and head of Advent International in India, elaborates her plans about the synergies between Suven Pharma and Cohance. Edited excerpts:

Why is Suven Pharma a good fit for Advent’s healthcare plans in India?
 

Suven Pharma is a good fit given its market leading position, high share of revenues from innovator customers and industry leading financial profile in terms of growth. It clocked a 21 per cent growth between FY18 and FY22. EBITDA margins were 44 per cent in FY22 and return on capital employed was 53 per cent. Suven Pharma has demonstrated record execution and delivery excellence due to deep chemistry capabilities, having worked on over 900 projects. This has resulted in deep and sticky customer relations with over 25 leading innovator pharma and specialty chemical companies. On the whole, it is a very high quality asset with deep delivery capabilities.

What is the outlook about Suven Pharma and synergies with Cohance?
 

Suven alone has multiple engines of growth across all segments and a strong pipeline of Phase 3 and late Phase 2 molecules. Our long-term outlook is to build deeper relations with existing logos, scale offerings such as lifecycle development for pharma innovators, acquire new customers and scale up specialty chemicals. Cohance, wholly owned by Advent International Corporation, was formed to create a new brand identity for its integrated CDMO and Merchant API platform. It has total pro-forma revenue of Rs 1,280 crore (FY22). It has complex chemistry capabilities, including expertise in controlled substances, antibody drug conjugates (ADCs) and highly potent active pharmaceutical ingredients, among others. Cohance has built relationships across 25 pharma and specialty chemicals innovators, given its ability to handle complex, multi-step chemistries across the lifecycle of a molecule. Overall, Cohance has seven manufacturing facilities across India with focus on safety, quality and regulatory compliance.

What is the rationale behind the deal; is it the right price for this asset?

Our aim is to be one of India’s top, over $1 billion, diversified, end-to-end CDMO, specialty chemicals and merchant API players. There are multiple growth engines, which can drive accelerated growth at Suven Pharma. They include executing on the pipeline, building out a business development team, turbo-charging development work and scaling up specialty chemicals portfolios. With a professional team, we could further accelerate growth. In addition, the combination with Cohance provides access to massive capacity, cross selling to new innovators, ability to do lifecycle management and operational synergies. The combination could help accelerate new service lines, which will drive accelerated growth. The combination in terms of business mix and financial profile looks like a mini Divis and could be one of the leading CDMOs, specialty chemicals and API players in the country. The regulatory framework requires new controlling shareholders to provide strategies and future plans for the target company.

What is the outlook on the healthcare sector in India?

Healthcare is a very exciting sector to invest in India, driven by strong macro tailwinds. We have invested in five assets over the last three years — Bharat Serums and Vaccines (BSV), TTK Healthcare, RA Chem Pharma, ZCL Chemicals and Avra Labs.

In terms of themes, we are most excited about pharma outsourced services. This is at an inflection point, given the macro tailwinds and global realignment of supply chains. Our proposed investment in Suven Pharma is part of that theme

What does Advent plan to do with its health care investments in India?

Health care is a high priority for Advent globally and in India. We continue to look for new deals and opportunities to build our existing portfolio. In recent years, as detailed above, we’ve invested in five companies. We’ve seen success in the CDMO, API space and are in the process of building these assets. We continue to look for acquisitions given a favourable macro environment and benefits of scale. BSV is a high growth and unique specialty biotech business with focus on women’s health (rank 1), critical care and assisted reproductive therapy (rank 2). We are building leadership positions in their key brands in India (which operate in difficult-to-manufacture segments and develop therapies) and a global go-to-market with sales and distribution presence across emerging markets. Advent International is one of the largest global private equity investors, having over 400 private equity investments across 41 countries with $96 billion in assets under management. Advent has been active in India since 2010; it invested around $4-billion capital across 20 investments with five investments in health care. It has a unique experience of leading complex-listed company control transactions and delivering significant shareholder return.