Zydus Lifesciences to acquire 50% stake in Sterling Biotech from Perfect Day to expand into sustainable protein market

Zydus Lifesciences Limited, a major player in the global pharmaceutical industry, has entered a pivotal partnership by acquiring a 50% stake in Sterling Biotech Limited from Perfect Day Inc., a leading innovator in the field of fermentation-based proteins. This strategic acquisition signals Zydus’ foray into the rapidly growing market for sustainable, animal-free protein, aligning with global trends towards environmentally friendly and health-conscious nutrition.

Strategic Partnership and Acquisition Details

Zydus Lifesciences Limited, through its wholly owned subsidiary, has finalized an agreement to purchase approximately 50% of the shareholding in Sterling Biotech Limited from Perfect Day Inc., a company backed by Temasek, the Singaporean state investment firm. With this acquisition, Sterling Biotech will transform into a 50:50 joint venture (JV), equally managed by Zydus and Perfect Day, with both companies having equal representation on the board. This JV is set to be a game-changer in the global protein industry.

Focus on Fermentation-Based, Animal-Free Proteins

The joint venture plans to establish a cutting-edge manufacturing facility dedicated to the production of fermentation-based, animal-free protein products. These products are designed to cater to the rising consumer demand for sustainable, ethical, and eco-friendly nutrition options. The facility will produce high-quality proteins that can be used in various food products, including dairy alternatives, sports nutrition, and baked goods.

This move is particularly significant as it marks Zydus Lifesciences’ entry into the specialized biotech sector, focusing on health and nutrition products that meet the needs of consumers who are either lactose intolerant or prefer to avoid animal products. The partnership is expected to significantly reduce the environmental footprint associated with traditional protein production methods, which rely heavily on livestock farming.

Sterling Biotech’s Role and Future Direction

Sterling Biotech Limited is a prominent player in the pharmaceutical sector, known for its production of pharmaceutical gelatine, di-calcium phosphate, and active pharmaceutical ingredients (APIs). The company operates two state-of-the-art manufacturing facilities in Gujarat, India. These facilities will now be leveraged to produce animal-free proteins using precision fermentation techniques.

Under the new JV, Sterling Biotech will undergo a strategic shift, focusing more on the production of animal-free proteins while also reassessing its existing businesses in APIs and gelatine. This strategic redirection is in line with the global trend of moving towards more sustainable and environmentally responsible production methods.

Industry Impact and Global Market Positioning

This acquisition is not just a significant milestone for Zydus Lifesciences but also a critical development in the global protein industry. The JV is poised to accelerate the production of sustainable protein alternatives, which are increasingly in demand as consumers become more aware of the environmental and ethical implications of traditional animal farming.

Zydus Lifesciences, with its robust manufacturing and commercial expertise, is well-positioned to leverage this partnership to become a key player in the global supply chain for fermentation-based proteins. Meanwhile, Perfect Day, a pioneer in precision-fermented protein, will benefit from Zydus’ extensive infrastructure and market reach in India, allowing it to scale its operations and meet the growing global demand for its products.

Expert Opinions and Leadership Insights

Dr. Sharvil Patel, Managing Director of Zydus Lifesciences Limited, emphasized the strategic importance of this partnership, stating:

“We are dedicated to promoting growth through partnerships and are consistently exploring new collaborations to position India as a premier global supply chain hub. We are excited to join forces with Perfect Day and create a win-win combination that leverages both our strengths and expertise to create value for the consumers.”

Narayan TM, Interim CEO of Perfect Day, shared his enthusiasm for the collaboration, noting:

“This partnership allows Perfect Day to significantly boost its capabilities to meet the demands of the fast-growing global market. We deeply value our collaboration with Zydus and believe this joint venture will allow both parties to benefit from each other’s expertise.”

Strategic Importance for India

This joint venture also holds significant implications for India’s role in the global supply chain, particularly in the context of sustainable and eco-friendly products. With this partnership, India is poised to become a central hub for the production and distribution of fermentation-based proteins, contributing to the global shift towards more sustainable food systems.

The collaboration reaffirms the commitment of both Zydus Lifesciences and Perfect Day to harness India’s potential as a key player in the global market for sustainable proteins. As the world moves towards more responsible consumption patterns, this JV is expected to play a crucial role in shaping the future of the food industry.

Broader Context: The Rise of Fermentation-Based Proteins

The global demand for alternative proteins has surged in recent years, driven by a growing awareness of the environmental impact of traditional animal farming and the rising popularity of plant-based and fermentation-based food products. Fermentation-based proteins, in particular, have gained traction due to their ability to mimic the taste, texture, and nutritional profile of animal-derived proteins without the associated ethical and environmental concerns.

Perfect Day’s precision fermentation technology, which involves using microflora to produce proteins traditionally sourced from animals, is at the forefront of this movement. This technology has already been successfully integrated into a variety of consumer products, including ice creams, cream cheese, and sports nutrition products, which are available in markets across the United States, Hong Kong, and Singapore.

An ISO-compliant, third-party-reviewed life cycle assessment (LCA) of Perfect Day’s whey protein found that it reduces blue water consumption by up to 99%, greenhouse gas emissions by up to 97%, and non-renewable energy use by up to 60%, compared to conventional animal-based protein production methods. These figures highlight the potential of fermentation-based proteins to significantly reduce the environmental impact of food production.

Advisory and Financial Details

NovaaOne Capital Private Limited acted as the exclusive financial advisor to Perfect Day for this transaction. The financial terms of the acquisition have not been disclosed, but the strategic value of this partnership is clear as both companies position themselves to capitalize on the growing demand for sustainable protein alternatives.

A Step Towards a Sustainable Future

The joint venture between Zydus Lifesciences and Perfect Day marks a significant milestone in the global effort to create a more sustainable and environmentally friendly food system. By combining Zydus’ manufacturing expertise with Perfect Day’s innovative technology, the partnership is set to play a pivotal role in transforming the protein industry and promoting a healthier planet.

As consumer preferences continue to shift towards sustainable and ethically sourced products, this JV is expected to set new standards in the production and distribution of animal-free proteins, reinforcing India’s position as a global leader in the sustainable food industry.