PI Industries surges 10% on twin acquisitions in pharma API, CDMO space

Shares of PI Industries surged 10 per cent to Rs 3,371 on the BSE in Friday’s intra-day trade in an otherwise subdued market after the company announced twin acquisitions into pharma active pharmaceuticals ingredients (APIs) and the contract development and manufacturing organization (CDMO) space.

PI Health Sciences (PIHS), a wholly-owned subsidiary of PI Industries (PI), has executed definitive documents with Therachem Research Medilab LLC (TRM) for acquiring its wholly-owned subsidiaries in India (TRM India and Solis Pharma Chem) and assets in the US. The purchase consideration for the same is $50 million and an additional payment upto $2.5 million in performance linked pay outs over the next six years.

TRM is a chemistry-driven solution provider in medicinal chemistry research, process research and development, specializing in the rare disease area. It provides services and products to pharmaceutical and biopharmaceutical companies in the preclinical and clinical stages.

PIHS also executed definitive document with Plahoma Twelve GmbH for acquiring 100 per cent stake in Archimica S.p.A (Archimica). The purchase consideration for the same is €34.2 million.

Archimica is an Italy-based small molecule API manufacturer and a CDMO servicing over 60 marquee customers in more than 30 countries. Archimica owns 24 US DMFs, GMP manufacturing facility for APIs and Intermediates across wide therapeutic and substance classes such as Oncology, Anti Ulcer, and Anti Arthritis.

These acquisitions will boost PI’s capabilities in API and CDMO space.

The purchase consideration will be paid in cash and funded from the completed Qualified Institutional Placement (QIP) proceeds and internal accruals. Both acquisitions are expected to be earnings accretive with immediate effect, PI Industries said.

The consummation of the transactions and integration into the corporate structure of PI is expected to be completed during Q1FY24, subject to the fulfilment of customary closing conditions and regulatory approvals, the company said.

According to ICICI Securities, these proposed acquisitions could be a step towards mitigating dependence on Agrochem CDMO business. This will also help deployment of QIP funds which remained unused for quite some time on the balance sheet thereby improving return ratios for the company, the brokerage firm said in a note.

It was a much awaited acquisition by PI in the pharma API and CDMO space, which is expected to be one of the key growth pillars for PI in the future. PI is known for pursuing science-led opportunities and has been one of the leading players with a unique business model in the agri-science industry for over seven decades, Motilal Oswal Financial Services said in its note.

With these acquisitions, PI will create a differentiated position in the pharma sector by leveraging its core competencies in complex chemistry, process development, operational excellence, technology platforms and global reach through partnerships with prominent innovators, the brokerage firm said.