Mumbai-based pharmaceutical player Alkem Laboratories is the latest company planning to file initial public offering (IPO) prospectus with market regulator Securities and Exchange Board of India (SEBI). Alkem Laboratories is believed to be considering raising INR1,500-3,500 crore through the IPO. Going by the details available so far, the IPO is likely to put a valuation of INR15,000 crore on Alkem Laboratories. With seven state of the art manufacturing facillities, Alkem claims to be among top 7 pharmaceutical companies in India. The company has a well-established research and development (R&D) centre and employs more than 250 scientists.
Alkem will soon file its draft paper with capital market regulator SEBI to float an IPO
IPO proceeds are expected to fund the company’s expansion in international markets. Founded in 1973, Alkem started operations as a healthcare marketing company but expanded later into the pharmaceutical business and currently offers services in Active Pharmaceutical Ingredient (API), branded and generic drugs. It has grown steadily and has maintained a compounded average of 16% over the last five years to achieve annual revenues in excess of INR3,200 crore (USD500 million).
Hot IPO market but not kind to pharma
The report follows the recent massively successful IPO of Biocon-subsidiary Syngene International. The IPO witnessed a total subscription of 32 times while retail investors bid for more than 3.34 crore shares against 70 lakh on offer.
With an exception to Syngene International, stock market has not been kind to pharma companies. Most recently, Pune-based Emcure Pharmaceuticals withdrew its IPO application in June 2014. Prior to this, Intas Pharmaceuticals received an expedited clearance from SEBI for an IPO in September 2013 but did not launch the public offer. Similarly, Calyx Chemicals & Pharmaceuticals’ IPO plans received SEBI approval in January 2013 but the public offering did not materialize.