Sequent Scientific Share Price: Merger Talks with Viyash Life Sciences Spark Interest

Introduction

In a significant development within the pharmaceutical sector, Sequent Scientific Ltd., a prominent player in the animal health business, is in advanced talks for a potential merger with Viyash Life Sciences, a company specializing in active pharmaceutical ingredients (APIs) and formulations. This merger, valued between Rs 7,000 to Rs 8,000 crore, could have substantial implications for the share price of Sequent Scientific and the broader pharmaceutical industry.

Background on Sequent Scientific

Sequent Scientific Ltd., incorporated in 1985, is a Small Cap company operating in the pharmaceutical sector with a market capitalization of approximately Rs 4,358.93 crore. The company has a diverse presence, with seven manufacturing sites spread across India, Spain, Brazil, and Turkey. Sequent Scientific's revenue for FY24 stood at around Rs 1,400 crore, with earnings before interest, tax, depreciation, and amortization (EBITDA) of Rs 100 crore.

Viyash Life Sciences: A Growing Presence

Viyash Life Sciences, founded in February 2019 by Dr. Hari Babu, the former Global COO of Mylan (now Viatris), has quickly established itself as a significant player in the API and formulations market. The company boasts ten manufacturing plants, including one in New Jersey, USA, and has a strong presence in the US generics market. For FY24, Viyash Life Sciences reported revenue of Rs 1,400 crore with an EBITDA of Rs 150 crore, which is notably higher than Sequent Scientific's EBITDA for the same period.

Merger Talks and Potential Synergies

The potential merger between Sequent Scientific and Viyash Life Sciences is driven by the possibility of significant back-end synergies. According to sources, the merger could leverage Viyash's robust manufacturing capacity, including its US FDA-approved facilities, to enhance Sequent Scientific's operations. Viyash's growing US presence and its ability to service both regulated and semi-regulated markets could be particularly advantageous for Sequent Scientific, which has a strong presence in Europe and emerging markets.

Carlyle Group's Involvement

The Carlyle Group, a global investment firm, has been instrumental in this potential merger. Carlyle has a significant stake in both Sequent Scientific and Viyash Life Sciences. The firm has a history of investing in the healthcare sector, both in India and globally, with investments totaling over $14.7 billion in more than 80 healthcare deals as of September 2021.

The announcement of the potential merger has sparked interest in the share price of Sequent Scientific. As of the latest trading data, Sequent Scientific's share price stands at around Rs 173.72, with a 52-week high of Rs 184.70 and a low of Rs 86.40.

The merger, if successful, could lead to increased efficiency and expanded market reach for Sequent Scientific, potentially driving up the share price. However, the current high price-to-earnings (PE) ratio of 794.41 and the absence of dividend yield indicate that investors are already pricing in significant growth expectations.

Conclusion

The potential merger between Sequent Scientific and Viyash Life Sciences represents a significant development in the pharmaceutical industry, particularly in the context of India's growing role as a global pharma hub. As the talks progress, investors will be closely watching the impact on Sequent Scientific's share price and the broader implications for the sector. With Carlyle Group's backing and the synergies expected from the merger, this deal could mark a new chapter of growth and consolidation in the Indian pharmaceutical landscape.