### **Overview** Sequent Scientific Limited is India’s largest animal health company and ranks among the top 25 globally. Headquartered in Mumbai, India, the company operates through an integrated business model spanning **Active Pharmaceutical Ingredients (APIs), Finished Dosage Formulations (FDFs), and Contract Research Services**, serving over 150 countries. Operating under the **Alivira** brand in animal health and **Sequent Research Limited (SRL)** for analytical services, Sequent is positioned as a trusted global supplier to major pharmaceutical innovators and generic manufacturers. Backed by **The Carlyle Group** since 2020, the company has undergone a strategic transformation under its **"Sequent 3.0"** vision—aiming to become a scaled, integrated, end-to-end global leader in animal health with capabilities spanning **intermediates, APIs, formulations, and analytics**. --- ### **Key Strategic Developments: Merger with Viyash Life Sciences** In September 2024, Sequent Scientific announced a **strategic merger with Viyash Life Sciences Private Limited**, with completion expected by **December 2025**, pending regulatory approvals. This landmark transaction is structured to create a **dominant global player in human and animal health**, combining Sequent’s market leadership in animal health with Viyash’s strong R&D, regulatory, and manufacturing capabilities. #### **Merger Rationale & Expected Synergies** - **Enhanced R&D Scale**: The combined entity will have **nearly 200 R&D scientists**, a sixfold increase in R&D capacity for Sequent, significantly boosting new product development. - **Manufacturing Expansion**: The merged company will operate **16 manufacturing facilities**, with **five times the manufacturing capacity** and **ten US FDA-approved sites**, positioning it among the top industrial platforms in life sciences. - **End-to-End Integration**: The merger enables full vertical integration—from intermediates to formulations—with **shared supply chains, procurement synergies, and backward integration opportunities.** - **Financial Strength**: Net debt/EBITDA is currently at **1.4x–1.5x**, with expectations of further deleveraging post-merger. The transaction is **margin accretive from day one**. - **Global Reach**: Combined operations in over **150 countries**, with access to marquee clients across both human and animal pharma. - **Swap Ratio**: 56 Sequent shares for every 100 Viyash shares—jointly advised by **KPMG and PwC**, with a fairness opinion from **ICICI Securities**. Viyash, founded in 2019, has grown rapidly through acquisitions and partnerships (including with Carlyle), with a portfolio of **~60 commercial APIs** and **150+ total products**, strong IP strength (175+ filed, 30+ granted patents), and a robust new product launch capability (~15/year). --- ### **Business Segments & Global Operations** #### **1. Active Pharmaceutical Ingredients (APIs)** - **Revenue Contribution**: ~25% of total revenues (₹3,260 Mn in FY24), primarily from **regulated markets (U.S., Europe, Latin America, China)**. - **Facilities**: - **Vizag, India**: 305.9 KL reactor capacity; USFDA, EU GMP, WHO approved; only **USFDA-approved greenfield animal health API facility in India**. - **Mahad, India**: 80 KL capacity; USFDA, EU GMP, WHO approved; recently requalified with focus on oncology APIs. - **Portfolio**: - 60+ commercialized APIs; top 10 APIs contribute **62% of API revenue**, six of which are **global market leaders (>50% share)**. - Strong focus on **complex, fully backward-integrated molecules** with sustainable gross margins. - Pipeline depth of **20–25%**, with ongoing regulatory filings (US VMFs, CEPs). - **R&D**: Dedicated **175-person API R&D team** delivering INR 10–12 crores in annual value; 28 DMFs filed in 3 years. - **Recent Performance**: Q3 FY25 showed **14.4% y-o-y growth**; strong demand for anthelmintics and pain management APIs. #### **2. Finished Dosage Formulations (FDFs)** - **Revenue Contribution**: **>70% of total revenue**, acting as the primary growth engine. - **Markets**: - **Europe (largest market)**: 9.5% y-o-y revenue growth in FY24 (constant currency); growth accelerated to 28% when adjusting for German/Spanish plant closures. - **India**: Double-digit growth via expanded field force (+40%); strong adoption of distributed innovator brands and Alivira portfolio. - **Latin America**: Strategic growth via Brazil (top 5 player in poultry/swine), new distributor in Peru, and registrations across 6 countries. - **Turkey**: Top 3 player in ruminants; EU GMP-certified facility supports exports and foreign exchange hedging. - **Product Areas**: - Broad portfolio in **antibiotics, antiparasitics, pain management, gut health, and phyto-solutions**. - **Phytosolutions line** (essential oil-based bio-actives) growing rapidly in Europe, Mexico, Brazil, and Turkey. - Companion animal segment identified as high-growth area, with recent launches like **Dogstem** and **Flortekxin**. - **Recent Developments**: - Germany’s Bremer-Pharma plant shut down (Q3 FY23–FY24), with brands being transferred to Turkey; restart expected in **FY26**. - Phytosolutions achieved **€4 Mn in FY23 sales**, up 74% y-o-y. - **Tulaject (tulathromycin injectable)** launched in Turkey to strengthen respiratory disease offerings. #### **3. Analytical Services (Sequent Research Limited - SRL)** - **Facility**: USFDA-approved, 16,600 sq. ft. lab in Mangaluru with ~70 scientists. - **Capabilities**: Instrument analysis, trace elements, genotoxic impurities, nitrosamine testing, stability studies, LIMS. - **Clients**: Global pharma and life sciences companies; supports regulatory submissions and quality assurance. --- ### **R&D, Regulatory & Manufacturing Strength** #### **R&D Network** - **Five global R&D centers** (India: Vizag, Mumbai; Europe: Barcelona; Turkey; Brazil). - Focus on **complex generics, specialty formulations, and injectables**. - Pipeline includes **>35 products under development**, with 15 high-priority projects in **companion animals (65% of pipeline growth potential)**. #### **Regulatory Excellence** - **Clean audit track record**: Two US FDA EIRs in FY24; **99 customer audits passed** in 6 months. - **Regulatory Approvals**: - FY25 H1: 6 approvals (2 US FDA, 3 CEPs, 1 other). - Longstanding compliance: No OAI findings in **28 inspections over 15 years**. - **Filing Strength**: 31 US Veterinary Master Files (VMFs) filed to date; 16 CEPs in Europe. #### **Manufacturing Capacity** - **Total Reactor Capacity**: ~2,400 KL across sites. - **Nine Manufacturing Facilities**: - **India**: Vizag (API), Mahad (API), Ambernath (Formulations). - **Europe**: Spain, Germany (phased out), Turkey. - **Latin America**: Brazil. - All sites hold **USFDA, EU GMP, WHO, or TGA approvals**. --- ### **Geographic & Market Strategy** #### **Regulated Markets (65–70% of Revenue)** - Core focus on **U.S., Europe, Japan, and Latin America**. - High demand for **high-quality, compliance-driven products** enables premium pricing and long-term contracts. - Recent regulatory filings in U.S., Canada, and Australia mark strategic entry into **key veterinary pharmaceutical markets**. #### **Emerging Markets** - **India**: Growing at 6–7% CAGR; formulations business expanding via new brands, distribution partnerships (e.g., Zoetis), and field force expansion. - **Turkey**: Strategic export hub; EU GMP-certified injectables facility supports European supply. Despite macroeconomic volatility, pricing power maintained. - **Brazil**: Top 5 player in poultry/swine; strengthened by **Nourrie acquisition (2022)**, adding pet and swine portfolio and CDMO capabilities. --- ### **M&A and Strategic Acquisitions** Sequent has completed **nine acquisitions** over the last 7 years to build integration and geographic scale: - **Nourrie Saúde (Brazil)**: Entry into **companion animal market** (4th largest globally), ~BRL 1.8 Bn market growing at 16% CAGR. - **Provet Veteriner (Turkey)**: Largest local ruminant health player; provides manufacturing and distribution dominance. - **Symed & other formulation companies** (2021): Bolstered formulations footprint and commercial capabilities. Future M&A focus: **Bolt-on acquisitions in companion animal health and formulation CDMO segments**. --- ### **Leadership & Governance** - **MD & CEO: Mr. Rajaram Narayanan** (appointed April 2022); former MD at Sanofi India, with deep experience in pharmaceuticals and consumer goods. - Promoter: **Carlyle Group**, providing long-term capital and strategic direction. - Management team has **over six decades of combined experience** in pharma and global healthcare. --- ### **Strategic Initiatives** - **Project Pragati**: Company-wide operational excellence initiative focusing on **cost reduction, yield improvement, footprint optimization**, and **margin expansion**. - **Backward Integration**: In-sourcing of key intermediates and KSMs to improve margins and reduce supply chain risk. - **Capacity Expansion**: - Vizag site: New production block and 7th clean room added (20% capacity boost). - Turkey: Expansion in beta-lactam and oral solid lines. - India: Granulation, liquid filling; Brazil: Powders, premixes. - **Digital Transformation**: SAP implementation across European operations to streamline finance and operations. --- ### **Financial Highlights (FY24)** - **Consolidated Revenue**: ₹13.69 billion (~$165 Mn) - **Formulations Revenue**: ₹10,009 Mn (73% of total) - **API Revenue**: ₹3,260 Mn (down from ₹3,807 Mn due to delayed shipments) - **Q1 FY25 Revenue Growth**: **21.1% y-o-y**, driven by Europe, Turkey, and India.