Poonawalla scoops up Dutch Bilthoven

Serum Institute of India, the flagship company of Pune-based Cyrus Poonawalla Group, has bought 100% stake in Bilthoven Biologicals from the Netherlands government.

This deal gives Serum access to technology and expertise for making the injectible polio vaccine (Salk) in addition to a crucial manufacturing base in Europe, with access to the important European and US markets.

According to Cyrus Poonawalla, chairman, Poonawalla Group and Serum Institute, the acquisition gives them an important operational and strategic beachhead in Europe and the US, with the important manufacturing base in the Netherlands. “This will also significantly enhance our earlier offerings in the pediatric vaccines segment including DPT, Measles and MMR, where we are the global leaders today,” he said.

Located in the city of Bilthoven, the company’s manufacturing facility is spread over 20 acres and employs over 200 people. The facility has a manufacturing capacity of over 20 million doses of vaccines a year, which are sold in Europe and various developing countries.

The deal is the first ever overseas acquisition by an Indian vaccine company, said Adar Poonawalla, executive director, Poonawalla Group and Serum Institute. “The initial cost of €32 million is only for 100% share purchase. The entire acquisition will roughly cost us €80 million, payable over the next three years. This is because a lot of liabilities and assets are still to come to us and we will have to absorb and spend over the next three years or so. In addition, we will invest €20-30 million in the next few years towards infrastructure and building on capacities etc,” he said.

Funding the acquisition has been done through a mix of internal accruals and debt of €20 million taken largely for working and operational capital requirements.

“Our balance sheet can easily support this level of acquisition without taking much debt something we didn’t want to do at this stage,” said Poonawalla.

Bilthoven was in the market for over a year and had a host of contenders, including a couple of Chinese and Dutch companies and a few big pharmaceutical multinational companies. However, most of these suitors pulled out of the race as the company was booking operational losses of €30 million a year.

 “The losses were mainly because of the company’s huge assets and there was not much sale as the product being manufactured has more future demand than current,” said Poonawalla.

The Government of Netherlands, according to Poonawalla, was looking for a strategic buyer that would retain the existing employees, turn the business around and help it grow.

Serum has had business dealings with Bilthoven for over three decades and was thus shortlisted as a preferred buyer.