Strides Pharma to spin off CDMO, gelatin business into separate entity

OneSource is created by merging Strides' soft-gel business and SteriScience CDMO injectables business into current Stelis

Bengaluru-headquartered Strides Pharma Science is spinning off its contract development and manufacturing (CDMO) business along with the soft-gelatin unit into an entity called ‘OneSource’ (currently Stelis Biopharma).

It is set to be listed in the next 12-15 months in order to have better synergies and unlock value.

OneSource is created by merging Strides Soft gel business and SteriScience CDMO injectables unit into the current Stelis.

Strides Pharma stock reacted positively to the development. It raced to a 52-week high of Rs 549 before closing at Rs 535.65, up by 7.42 per cent, on the BSE.

Strides noted that shareholders will receive one share of ‘OneSource’ for every two shares of Strides at a swap ratio of 1:2. The implied value of OneSource for Strides shareholders is Rs 364 per share.

"The new platform will be able to offer development and manufacturing services covering platform technologies, specialty injectables, complex generics, biosimilars, and biologics," it added. 

Strides noted in an investor presentation that it expects OneSource business in FY25 to achieve sales between $180 million and $200 million with around 30 per cent Ebitda margin based on strong order book. 

OneSource has potential to double its scale in 3-4 years, mainly from the momentum from biologics and high-end drug device combinations in GLP-1 products, it added.

Strides board on Monday approved a scheme of arrangement between Strides Pharma Science and Steriscience Specialties and Stelis Biopharma, Strides Pharma said in a stock exchange notification.

Strides will demerge its oral soft gelatin business and the identified CDMO business (including investments held by Strides in Stelis) into Stelis. 

Upon demerger, the shares of Stelis held by Strides will be cancelled and the shareholders of Strides would become shareholders of Stelis.

SteriScience (a promoter group company) will demerge the identified sterile injectables CDMO business into Stelis.

Pursuant to the demerger, Stelis will issue equity shares to the shareholders of Strides and SteriScience on the recommended share entitlement ratio determined by an independent valuer.