EXIT FORMULA: bioMérieux, Shantha’s majority stakeholder, wants to exit (Pic by Shashi Kiran K.)

While Shantha’s founder K.I. Varaprasad Reddy claims that bioMérieux may close the deal with UK drug giant GlaxoSmithKline or France’s Sanofi-Aventis within a month, industry insiders say that bioMérieux is unlikely to find takers so easily.

According to sources, if the company were to change hands, it would no longer be able to manufacture its pentavalent vaccine (five in one), which is expected to be a major growth driver for the company in the next few years: Shantha recently received an order for 350 million doses from the United Nations Children’s Fund (Unicef).

Shantha signed a technology agreement with Switzerland’s Berna Biotech (later acquired by Dutch biotech Crucell) to manufacture the vaccine back in 2007. The agreement included a clause stipulating that if there was a change in majority shareholder, the agreement would become void. “There is such a clause,” admits Reddy. However, he claims, Shantha may still be able to continue to manufacture the vaccine using a different technology. For now, only Crucell and Delhi-based Panacea Biotec have a proprietary technology to develop the pentavalent vaccine. While GSK manufactures it too, its vaccine is not liquid and, therefore, less convenient to use. Several emails sent to bioMérieux’s spokesperson remained unanswered.

With no pentavalent vaccine, bioMérieux is unlikely to be able to close the deal with GSK or Sanofi-Aventis, or at least, not at the kind of valuations it may have expected.

(Businessworld Issue Dated 28 Jul-03 Aug 2009)