Mankind Pharma to take over Panacea Biotec Pharma

Mankind Pharma will buy the domestic formulations business of Panacea Biotec Pharma, a subsidiary of Panacea Biotec. The total consideration for the purchase will be around Rs.1,872 crore. Panacea Biotech is best known as the manufacturer of Sputnik-V, the Russian vaccine to tackle COVID pandemic. Panacea Biotec board approved the decision to sell the formulations business as per a filing with the stock exchanges.

While Panacea Biotec sells the domestic formulations business it will also include the formulations brands in India and Nepal, all the related trademarks, copyrights etc belonging to its subsidiary Panacea Biotec Pharma. Panacea Biotec Pharma and Mankind Pharma have already entered into a binding term sheet on January 31. In response, the stock of Panacea Biotec was already up by 5% on the BSE.

Panacea Biotec Pharma was struggling to repay debt and was badly in need of funds. Piramal Enterprises and India Resurgence Fund had extended the repayment date last year after the company said that it did not have the cash. This deal will infuse the necessary cash and will also allow Panacea to service the debt. The company has a pay-out of nearly Rs.750 crore to be done in the current year and now that should be a smooth affair.

The parent, Panacea Biotec, had transferred its pharma formulations business and its formulations facility at Baddi, apart from the related R&D and natural products extraction activities at Lalru to Panacea Biotec Pharma, its wholly owned subsidiary, in the year 2020. Incidentally, Serum Institute of India CEO Adar Poonawalla holds 8.59% stake in Panacea Biotec in his personal capacity. The parent is into vaccines and pharmaceutical products.

Under the terms of the deal, Mankind Pharma will retain Panacea's sales and marketing team fully and integrate them into the parent. The acquisition will be value accretive for Mankind Pharma as it will allow them to explore new therapeutic areas and also to create visibility in lifestyle, oncology and transplant business.