Suven Pharmaceuticals and Cohance Lifesciences announce merger
In a significant development in the pharmaceutical industry, Suven Pharmaceuticals Limited (Suven) and Cohance Lifesciences Limited (Cohance) have announced a proposed scheme of amalgamation, marking a pivotal moment in the journey of both companies. The merger is set to enhance Suven’s standing in the Contract Development and Manufacturing Organization (CDMO) space, aiming for leadership by scaling operations, ensuring consistent earnings, and fortifying financial stability.
Cohance, recognized for its global leadership in selected low-mid volume molecules and its unique Antibody Drug Conjugates (ADC) platform, has demonstrated a robust Compound Annual Growth Rate (CAGR) of over 30% from FY20 to FY23. This merger is expected to significantly benefit Suven by combining Cohance’s strengths, particularly in the ADC platform and Merchant API platform, with Suven’s existing capabilities, thereby expanding the merged entity’s capacity to approximately 2,650 kiloliters and broadening its customer base.
The merger is strategically aligned to further strengthen Suven’s leadership position in the CDMO industry by integrating niche capabilities and achieving scale benefits. The combined entity is poised to become one of the leading integrated CDMO players in India, offering multiple engines of growth through three distinct business units: Pharma CDMO, Spec Chem CDMO, and API+ (inclusive of formulations). This integrated model facilitates comprehensive molecule development and lifecycle management for pharmaceutical and specialty chemical partners, enhancing offerings to customers and partners.
Additionally, the merger provides access to Good Manufacturing Practice (GMP) facilities, allowing the expansion of product offerings to existing customers. The anticipated revenue and cost synergies are substantial, including limited customer overlap for cross-selling opportunities, cost optimization, and shared best practices across the platform. This strategic combination is expected to create significant value for shareholders, with best-in-class financial metrics including mid-30s EBITDA margins and over 30% Return on Capital Employed (RoCE).
Annaswamy Vaidheesh, Executive Chairman of Suven, expressed excitement about the transformative step in Suven’s growth journey, emphasizing the combined scale, capabilities, and complementary customer base. Dr. V Prasada Raju, Managing Director of Suven, highlighted the potential for driving multiple synergies on the revenue and cost fronts. Shweta Jalan and Pankaj Patwari, Board Members of Suven, reiterated the commitment to building a leading CDMO player in India, inspired by global peers.
The swap ratio has been determined, with all shareholders of Cohance set to receive 11 shares of Suven for every 295 shares of Cohance. The new shares will be traded on the NSE and BSE, with Advent entities owning approximately 66.7% and public shareholders holding around 33.3% of the combined entity. The transaction is expected to conclude within the next 12-15 months, pending all relevant shareholder and regulatory approvals.
This merger represents a strategic step forward for Suven and Cohance, combining their strengths to establish a diversified CDMO and API leader in India, with the vision of scaling globally. The collaboration between Suven Pharmaceuticals Limited and Cohance Lifesciences Limited is set to redefine the pharmaceutical and specialty chemical landscape, driving innovation, growth, and value creation for stakeholders.