Biocon: IPO will evolve Syngene CRO into full manufacturing services firm

19-Jul-2015 - Last updated on 20-Jul-2015 at 13:02 GMT

Indian drugmaker Biocon is looking to spin out its CRO Syngene

Indian CRO Syngene has received approval for its IPO prospectus paving the way to spin out from its parent company Biocon.

According to a letter filed with the Bombay Stock Exchange (BSE) last week, Bangalore-headquartered drugmaker Biocon is set to begin offering equity shares in its contract research organisation (CRO) Syngene International on July 27 for two days, after a Red Herring Prospectus* was approved by the Indian Government’s Registrar of Companies (ROC).

The news comes three months after Biocon announced it was looking to spin-out its CRO business through an initial public offering (IPO) some commentators speculated could raise up to 6bn rupees ($94 million).

The price per equity share has been fixed between 240 and 250 rupees ($3.8-$3.9m) and, in a statement, Managing Director Kiran Mazumdar-Shaw said the ROC’s approval “is an important milestone” for Syngene and the IPO process.

“We believe that Syngene has earned a global reputation in the area of integrated discovery and development services for novel small molecules and biologics and are confident of the value proposition that the company offers.”

Syngene employs around 2,000 scientists and has over 90,000 sq ft of lab and manufacturing space, but the services firm is hoping to expand its capabilities and capacity through the IPO.

“We intend to evolve from a CRO into a Contract Research and Manufacturing Services (CRAMS) organisation with commercial-scale manufacturing capabilities, as we leverage our existing relationships with clients and provide forward integration on the discovery and development continuum,” the Red Herring Prospectus states.

This strategy see Syngene building a new commercial-scale facility in Mangaluru, which will make small molecules for innovator companies, while the firm is also in the process of expanding its large molecule manufacturing capabilities with a new unit in Bengaluru.

“We believe we are very well-positioned to benefit from the growth in the global CRAM’s market and see this listing a natural next step in our evolution expanding on other recent investments,” Syngene’s CEO Peter Bains said.

*A Red Herring Prospectus is a prospectus, which does not have details of either price or number of shares being offered, or the amount of issue.