Akums Drugs and Pharmaceuticals sets IPO price band at Rs 646-679 per share

Contract manufacturer Akums Drugs plans expansion; targets higher margins

Akums Drugs and Pharmaceuticals, the largest Contract Development and Manufacturing Organisation (CDMO) in India, is setting its sights on expanding its product portfolio and increasing its manufacturing capacity.

Akums' business strategy revolves around adding new off-patent and patented products, increasing production capacity, and entering new markets. The company has recently introduced gummies and nasal sprays.

"Our focus is on adding both off-patent and patent items, building capacity wherever we are short, and opening new avenues, including oncology," said Sandeep Jain, founder & Managing Director of Akums Drugs & Pharmaceuticals.

The company's current operations span a wide range of dosage forms, including tablets, syrups, injections, and eye drops. They are keen on developing new formats and improving existing ones to meet market demands. However, their oncology pipeline, particularly therapies like salt therapy or biosimilars, is still in the conceptual phase.

When asked about the timeline for setting up a dedicated oncology plant, Jain refrained from making any futuristic statements. "We have plans for a new plant in India, but no specific timelines or outlooks can be provided at this moment," he added.

Speaking on returns, Sumeet Sood, CFO of Akums Drugs & Pharmaceuticals, stated, "We expect our overall business margin to move up to 12.5 per cent going forward. While the CDMO business, which contributes to 78 per cent of our revenue and 94 per cent of our margin, will likely maintain its 14.5-15 per cent return, we believe the overall business will see an upward trajectory in profitability."

Despite the broader industry challenges, such as stricter regulations under the USFDA and the global focus on reducing dependency on China for APIs, Akums is confident in its quality systems and compliance with international guidelines. The company prides itself on transparency and robust quality control, having faced over 517 audits in the past few years.

The company’s primary focus continues to be on enhancing its existing portfolio and ensuring high standards of quality and compliance across all operations.

Akums today announced its IPO price band at Rs 646-679 per share. The IPO will open for subscription on July 30 and close on August 1. The company's IPO is a combination of a fresh issue of equity shares worth Rs 680 crore and an offer-for-sale (OFS) of 1.73 crore shares valued at Rs 1,177 crore, at the upper end of the price band, by promoters and an existing investor bringing the total IPO worth to Rs 1,856.74 crore.

The money raised from selling new shares (Fresh Issue) will be used for several purposes such as paying off its debt, which includes the company's own debt as well as debt owed by its subsidiaries Maxcure Nutravedics and Pure and Cure Healthcare, funding its working capital, pursuing inorganic growth initiatives through acquisitions, and general corporate purposes.

Akums is India’s leading CDMO, providing comprehensive development and manufacturing services to the pharmaceutical industry. With 12 formulation plants and three API plants, the company caters to 62 countries and holds the 25th rank globally.