European Venture to Shape Billionaire’s Cipla Merger Talks

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Serum Chairman Cyrus Poonawalla
Cyrus Poonawalla, chairman of Serum Institute of India Ltd.. Photographer: Sanjit Das/Bloomberg

Serum Institute of India Ltd., Asia’s largest vaccine maker, will look at a possible merger with generic drugmaker Cipla Ltd. if the European venture between the two companies succeeds. Cipla rose to a one-month high.

“If it’s successful, then the merger makes sense, because then we’d be selling as well as manufacturing here, so it’d make a lot of sense,” Serum’s billionaire Chairman Cyrus Poonawalla said in an interview in his Pune, India headquarters. “We won’t want to make a merger which could end up into nothing.”

Cipla was founded in 1935 by scientist Khwaja Abdul Hamied, and made its name selling generic HIV therapies in Africa. It now has a market capitalization of about $8.7 billion. Serum, owned by Poonawalla, makes vaccines injected into 65 percent of the world’s children.

Serum would want a majority stake in any combined entity as its profit is already a third more, Poonawalla said. “It’ll all depend on, after a few years, where his company stands. Cipla-Serum talks are not significant at the moment.”

Cipla added 0.9 percent to 688.55 rupees at the close in Mumbai trading on Wednesday, the highest since April 15.

Distribution Agreement

Serum held preliminary discussions with Cipla on a merger, Poonawalla had said in interview with CNBC-TV18 earlier this year.

The companies struck a distribution agreement for affordable pediatric vaccines in Europe, Cipla said in a statement on Nov. 20. Calls and e-mails to Cipla representatives weren’t immediately answered.

The partnership is at a nascent stage, and the companies are working together to introduce products in Europe first and then U.S, Poonawalla said.

Cipla’s owners had a 36.8 percent stake in the generic drug maker as of March, according to stock-exchange filings. Serum is entirely owned by Poonawalla, who has a fortune of $5.2 billion, according to the Bloomberg Billionaires Index.

Cipla had revenue of 101 billion rupees ($1.6 billion) in the fiscal year ended March 2014, and net income of 13.8 billion rupees, data compiled by Bloomberg show. Serum had a net profit of $291 million on revenue of $592 million in the fiscal year ended March 2014, according to Poonawalla.

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