SeQuent Scientific Ltd - Animal Healthcare
Hi fellow investor,
( Disclosure: I own shares of Sequent Scientific and hence my views maybe biased. Everything I conclude in the article is solely my opinion, based on publicly available information. This should not be taken as financial advice. This is purely for educational purpose.)
Let’s get straight into it.
Background!
SeQuent Scientific is an integrated pharmaceutical company operating in the domains of Animal Health (API and formulation). They have branded their Animal Health business as ‘Alivira Animal Health’, with presence in 100+ countries. They are currently the largest animal health company in India.
SeQuent Scientific (at the time known as PI Drugs & Pharmaceuticals Ltd) was set up in 2007 by KR Ravishankar (co-promoter of Strides Pharma), and manufactured bulk drugs and intermediates for Animal Health. The company’s name was changed to SeQuent Scientific after merger with a company of the same name, with interests in Human APIs and Speciality Chemicals. PI Drugs before the merger, mainly produced Anthelmintic APIs (i.e. drugs used to treat parasitic infections) like Albendazole (an API used in the human and veterinary segments to treat intestinal parasite infections) at its plant in Mahad, Maharashtra.
In FY 14, the company rebranded the Animal Health business to Alivira, to launch their formulations business. The aim was to enter formulation markets in India, MENA (Middle East and North Africa), EU, and LATAM through mix of acquisitions, distributors and own field force. Manish Gupta was brought in as CEO (former CEO Pharma division of Strides Arcolab). They also sold their Speciality Chemicals business for Rs 1bn in 2014. In FY15, they commissioned an Animal API facility in Vizag with 1000 MT capacity. At the time India’s only USFDA approved animal API plant.
In FY15 and FY16, the company made a flurry of acquisitions to expand their formulations business. These were financed through a mix of QIPs and warrants issued to promoters and PE funds. After the acquisitions, the no. of veterinary formulations in the company’s portfolio, increased from 192 to 475.
In FY17, the Human API business was demerged from SeQuent Scientific, to form Solara Active Pharma. Thus, making SeQuent a pure animal pharma company.
In FY18, they acquired Bremer Pharma from Zydus Cadila for Rs 194 mn. This gave them another EU certified plant (they already had one each in Spain & Turkey), located in Warburg, Germany and expanded their injectables portfolio.
In FY20, The Carlyle Group agreed to acquire 74% stake in SeQuent Scientific Ltd (including an open offer). The promoters of the company sold 44.92% stake, while Carlyle bought 5.69% stake held by an existing private equity investor Ascent Capital, at Rs 86 per share. The open offer though failed to be subscribed and Carlyle ended up with a 53% stake in the company.