An unpleasant outlook plus falling valuations in the pharmacy sector recently led Indian pharmaceutical companies to delay IPO. There are at least two pharmaceutical companies choosing to delay their IPO. They are Emcure Pharmaceuticals and Macleods Pharmaceuticals. Emcure Pharmaceuticals alone has shelved around $700m domestic float recently. Earlier before, Macleods Pharmaceuticals also pulled around a $376m IPO. These delays and decisions might affect other companies like Mankind Pharmaceuticals and Blue Jet Healthcare. Both Mankind Pharmaceuticals and Blue Jet Healthcare filed $1bn and $300m deals respectively from early September.
According to the recent updates, Emcure’s regulatory approval would gain validity until early December. Then, there is no sign of further action whether the company would refile the prospectus. Meanwhile the regulatory approval for the Macleods deal’s validity would be the next May. However, based on the banker close to the IPOs deal argues that the deals were such euphoria in the beginning. But slowly it turned out there is quite a drop in IPO valuations. Following the Gland Pharma in 2020, pharmaceutical companies queued for large IPO due to these blockbusters.
This is because the Shanghai Fosun Pharmaceutical Group’s subsidiary increased at Rs1.500 a share. In addition there is a falling valuations price P/E multiple of 20. On the contrary, the share price remains at Rs2.168. It means that it faced a slump 44% year to date due to the syringes shortage and injectable products. Previously, API Holdings, a healthcare platform operating the pharmacy e-commerce site canceled a planned Rs62.5bn. The company so far blamed the heated market conditions.
Furthermore, a Mumbai-based ECM banker argued that Indian pharma issuers expected 20-25 P/E multiples. However, the current market condition is too challenging. Therefore, larger deals would be hard following today’s market in the pharma sector.
