ZNZ Pharma acquires controlling stake in Celon Labs for Rs 364 crore

ZNZ Pharma 2, backed by the UK’s publicly-owned impact investor CDC Group, Development Partners International and European Bank for Reconstruction and Development, has acquired a 74 per cent stake in specialty generics company Celon Laboratories for Rs 364 crore.

ZNZ Pharma, which has recently raised $250 million (Rs 1,850 crore) from the three investors, will invest another around Rs 200 crore in Hyderabad-headquartered Celon to build an oral and injectables manufacturing facility for critical care and oncology.
“Celon Labs, which has posted revenue of Rs 200 crore last fiscal and is hoping to close the current fiscal with around Rs 250 crore of sales, was valued at around Rs 485 crore,” Celon managing director Middey Nagesh Kumar told ET.

Citadel Management Consulting, a Hyderabad-based mid-market investment banking firm, advised Celon on the transaction. Celon’s promoters, Vimal Kumar Kavuru and Vijay Kumar Vasireddy, will continue to focus on their pharmacy businesses overseas.

Managing director Kumar said the promoters would continue to hold around 26% of the equity, while the company would continue to be managed by the professionals under the supervision of ZNZ Pharma. “The proposed greenfield manufacturing facility will come up in Hyderabad, either near Shamirpet or at the upcoming Pharma City, a decision on which will be finalised soon,” said Kumar, adding that the new facility was aimed at catering to regulated markets across the world.

ZNZ Pharma, cofounded by chief executive Hocine Sidi-Said and chief strategy officer Alhadi Alwazir has plans to raise another $500 million soon for the acquisition of global pharmaceutical firms. “Celon Labs is currently catering to 45 countries in the markets of Asia Pacific, Africa, Latin America and some of the CIS countries, but not catering to the regulated markets,” said Kumar. The proposed investment in the greenfield facility should help the company penetrate into the regulated markets, apart from helping it expand capabilities and capacities on global scale to meet emerging market opportunities, he added.

At present, Celon has two manufacturing facilities in Hyderabad, catering to oncology and critical care segments.