Cohance Lifesciences Ltd · NSE:COHANCE
Cohance Lifesciences — Suven Pharmaceuticals — Merger or Acquisition (February 2024)
42 slides from Cohance Lifesciences's merger presentation, Feb 29, 2024
Slide 1: Suven Pharmaceuticals Ltd. Investor Presentation – On Proposed Merger
Suven Pharmaceuticals Ltd. …Towards a Brighter Tomorrow Investor Presentation – On Proposed Merger
Slide 2: Table of Contents
Table of Contents Transaction Details 05 Cohance Overview 08 Transaction Rationale 20 Business Mix for Combined 26 Entity Swap Ratio 30 Financials 32 Pg. 2
Slide 3: Safe Harbour
Except for historical information, all of the statements, expectations and assumptions, including expectations and assumptions, contained in this presentation may be forward-looking statements that involve a number of risks and uncertainties. Although Suven attempts to be accurate in making these fo
Slide 4: Executive Summary
Executive Summary Proposed merger expected to be double-digit EPS accretive (without synergies) from first year of it being effective ✓ Merger of Cohance Lifesciences Limited (“Cohance”) with Suven Pharmaceuticals Limited (“Suven”) Overview ✓ Cohance shareholders to get 11 equity shares of Suven for
Slide 5: Transaction Details
Transaction Details
Slide 6: Multiple steps taken to ensure high corporate governance standards
Multiple steps taken to ensure high corporate governance standards Market leading firms have conducted detailed due diligence –Financial, Legal and Tax. Further a leading global management consulting firm has done a thorough assessment of potential synergies expected from the merger Based on the due
Slide 7: Suven Shareholding Pattern
Suven Shareholding Pattern Pre-merger Shareholding Structure(1) Post-merger Shareholding Structure(2) Berhyanda Limited & Public Berhyanda Public Shareholding Jusmiral Holdings Limited Shareholding Limited 50.1% 49.9% ~66.7% ~33.3% Suven Suven + Overview • Upon the merger of Cohance with Suven., the
Slide 8: Cohance Overview
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Slide 9: Cohance Platform Overview
Cohance Platform Overview • One of the leading1, diversified CDMO + merchant API platforms in India with ~INR 13,375 Mn revenue and ~INR 4,213 Mn Adjusted EBITDA in FY232; serving pharmaceuticals and specialty chemicals customers across the globe • Well-invested asset with complex chemistry capabili
Slide 10: Key Highlights
Key Highlights 1 Focused portfolio and market leadership in low-mid volume, specialty APIs with low competitive intensity 2 Innovator CDMO arm contributes 44% of total gross profits and 32% revenue in 9MFY24, growing at ~33% CAGR 3 3 Global leadership in 8 of top 10 molecules driven by deep cost pos
Slide 11: Cohance Platform – Business Mix
Cohance Platform – Business Mix Increasing share of CDMO to ~44% of gross profits and ~32% of sales in 9MFY24 with a well diversified customer and product mix Sales Mix FY20 9MFY24 CDMO, CDMO, Increasing share of CDMO to 32% of 18% 32% sales in 9MFY24 vs. 18% in FY20 API++, API++, 82% 68% Profitabil
Slide 12: CDMO Segment - Business Philosophy
CDMO Segment - Business Philosophy ~44% gross profit contribution through CDMO arm across Pharma and Specialty Chemical Innovators; historically, grown at ~33% CAGR (FY20-23) Deep Innovator Relationships Complex Chemistry Capabilities • Relationships with ~25 pharma and spec chem innovators • Handle
Slide 13: CDMO Segment - Multiple platforms to drive future growth
CDMO Segment - Multiple platforms to drive future growth Extensive expertise across areas including highly attractive camptothecin drugs family, controlled substances, clinical trial intermediates and molecule lifecycle management Camptothecin Technology Platform Controlled Substance Platform ⚫ 1st
Slide 14: API++ Segment - Business Philosophy
API++ Segment - Business Philosophy Focus on select low-mid volume molecules, taking global market share, backed by deep cost position and robust chemistry capabilities Uniquely Curated Portfolio Diversified Business Mix • Focus on low-mid volume, high value specialty APIs with low competitive • Div
Slide 15: Cohance's Specialized Manufacturing Capabilities
Cohance’s Specialized Manufacturing Capabilities Total capacity of ~1250 kL expected to reach ~1,500 kL for API and Intermediates by 2024 through capex already invested in Cohance Plant State About the Facility Approvals Markets1 68 reactors with upto 1 Ankaleshwar Gujarat • Overall, 10 420kL capaci
Slide 16: Execution at Scale with Growth and Profitability
Execution at Scale with Growth and Profitability Consistent Revenue1 Growth Healthy EBITDA Margin1 profile Revenue (INR Mn) EBITDA (INR Mn) Growth impacted by global macro, delay in vendor 26% 29% 29% 31% 28% 28% 12,802 13,375 qualification and one COVID molecule in base 4,213 Maintained margin give
Slide 17: Revenue growth by segment
Revenue growth by segment • Longer Term: Strong revenue growth in CDMO segment (33% L3Y CAGR) & API++ (11% L3Y CAGR) driven by healthy mix of increasing wallet share in existing customers, new customer additions & new products • L9M: CDMO continued strong growth; API++ was affected due to short-term
Slide 18: Cohance's ESG Journey
Cohance’s ESG Journey • ESG framework made an integral part of operations • Recently received ISO 14001, ISO 45001 and ISO 9001 accreditations Results achieved in last 3 years Silver UNGC 33,000+ Ecovadis Rating Plantations since acquisition Member for API Unit I ie 30/day CO2 30% 15% 10% 5% Reducti
Slide 19: Cohance – Select complex chemistry competencies
Cohance – Select complex chemistry competencies Metal catalyzed Palladium catalyzed Highly Selective Carbonylations cross-coupling Capability to handle Alkylation to Esters using carbon reactions for C-C & highly potent catalyzed by LaCl3. monoxide on multi C-N bond molecules 2LiCl kilo scale format
Slide 20: Transaction Rationale
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Slide 21: Rationale for Merger
Rationale for Merger Proposed merger expected to be double-digit EPS accretive (without synergies) from first year of it being effective Creating a diversified CDMO from India – with 3 engines of growth a) Pharma CDMO b) Specialty chemicals CDMO (including agro chemicals) c) API++ (including A formu
Slide 22: Combined CDMO Platform
A Combined CDMO Platform Combination creates a well-diversified CDMO platform – De-risked from customer and product concentration; Provides 3 engines that can help reduce volatility in growth De-risking of Concentration Reduced Growth Volatility Customer Diversification: ⚫ 3 diverse engines of growt
Slide 23: Scale of Combined Business
D Scale of Combined Business Combined entity will have significant scale benefits Suven Suven + Cohance Amongst leading Indian players Revenue 13,403 ~2x 26,779+ Operational Metrics Operating leverage and INR Mn INR Mn customer perception on stability of the business Capacity ~1,400 ~2x ~2,650+ KL K
Slide 24: Financial Metrics (EBITDA Margins)
E Financial Metrics (EBITDA Margins) EBITDA Margin % ~35%+ 30% 30% 27% 25-28% 23% 18-22% 16-20% 13-15% 5-6% Suven + Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Cohance Merged Entity Global Peers Indian Peers Pg. 24
Slide 25: Multiple synergy levers to realize value
F Multiple synergy levers to realize value Revenue levers Cost levers Description Cost Levers Description Lifecycle management for Suven customers on the back Material Consolidation of Cohance capabilities and facilities Source material through vendor (1-2 years) supplying at minimum price; Volume d
Slide 26: Business Mix & Financial Metrics for Combined Entity
Business Mix & Financial Metrics for Combined Entity
Slide 27: Combined business to have healthy business mix with strong financial metrics
Combined business to have healthy business mix with strong financial metrics Merged Company Formulations & Others 17.1% Sales Mix CDMO API++ (9mFY24) API++ CDMO 32.4% 43.8% CDMO 67.6% 56.2% 82.9% Manufacturing Facilities 5 (2) 7 (5) 12 (7) (Regulatory approved) R&D Centers 1 4 5 Capacity ~1,400 kL ~
Slide 28: Combined business metrics – FY23
Combined business to have healthy business mix with strong financial metrics FY23 Merged Company INR Mn Revenue 13,403 13,375 26,779 Adjusted EBITDA 5,799 4,213 10,012 Adjusted EBITDA margin % 43.3% 31.5% 37.4% Adjusted PAT 4,012 2,762 6,774 Adjusted PAT margin % 29.9% 20.6% 25.3% RoCE 50% 34% 42% R
Slide 29: Combined business metrics – 9mFY24
Combined business to have healthy business mix with strong financial metrics 9mFY24 Merged Company INR Mn Revenue 7,984 8,919 16,903 Adjusted EBITDA 3,485 2,454 5,939 Adjusted EBITDA margin % 43.6% 27.5% 35.1% Adjusted PAT 2,569 1,450 4,019 Adjusted PAT margin % 32.2% 16.3% 23.8% RoCE 43% 28% 35% Ro
Slide 30: Swap Ratio
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Slide 31: CDMO + API players have traded at discount to Suven
CDMO + API players have traded at low-mid teens discount to Suven over longer term; implied multiple for Cohance is at a ~30% discount to Suven multiple CDMO + API players discount to Suven Daily average EV/LTM EBITDA1,2 discount (CDMO + API peers vs. Suven) for the respective time periods 40% 35% C
Slide 32: Financials
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Slide 33: Cohance Organic Proforma P&L – Snapshot
Cohance Organic Proforma P&L – Snapshot INR million CAGR Proforma P&L Snapshot FY20 FY21 FY22 FY23 9mFY23 9mFY24 FY20-FY23 9M YoY Revenue 8,631 10,043 12,802 13,375 9,346 8,919 15.7% -4.6% • Cohance platform build-out started in Oct ‘20; COGS (3,705) (4,004) (5,300) (5,058) (3,788) (3,316) Organic r
Slide 34: Cohance Proforma Balance Sheet – Snapshot
Cohance Proforma Balance Sheet – Snapshot INR million Proforma Balance Sheet Snapshot Mar20 Mar21 Mar22 Mar23 Dec22 Dec23 Property, plant and equipment (PPE) 3,824 4,128 4,090 4,217 3,920 4,557 Right of use asset (RoU) 2 13 89 179 202 189 328 Capital work-in-progress 99 155 458 1,167 967 1,728 Intan
Slide 35: Cohance Proforma – Key Ratios
Cohance Proforma – Key Ratios Increased working capital due to stock buildup and increase in other current assets on account of increase input GST in Q3FY24; expected to normalize during Q4 Key Ratios FY20 FY21 FY22 FY23 9mFY23 9mFY24 Basis Net Working Capital (as days of sales) 158 147 150 156 162
Slide 36: Suven P&L – Snapshot
Suven P&L – Snapshot INR million CAGR Consolidated P&L Snapshot FY20 FY21 FY22 FY23 9mFY23 9mFY24 FY20-FY23 9M YoY Revenue 8,338 10,097 13,202 13,403 9,710 7,984 17.1% -17.8% COGS (2,292) (3,019) (3,991) (4,225) (3,061) (2,179) Material Margin 6,046 7,078 9,211 9,178 6,649 5,805 14.9% -12.7% Materia
Slide 37: Suven Balance Sheet – Snapshot
Suven Balance Sheet – Snapshot INR million Consolidated Balance Sheet Snapshot Mar20 Mar21 Mar22 Mar23 Dec22 Dec23 Property, plant and equipment (PPE) 3,531 4,371 5,306 5,842 5,836 5,611 2 Right of use asset (RoU) 9 17 14 169 174 403 Capital work-in-progress 1,016 961 300 1,651 1,213 1,813 2 Intangi
Slide 38: Suven – Key Ratios
Suven – Key Ratios Key Ratios FY20 FY21 FY22 FY23 9mFY23 9mFY24 Basis Net Working Capital (as days of sales) 97 80 114 98 137 116 NWC / Revenue * no. of relevant days PPE (as % of sales) 42.3% 43.3% 40.2% 43.6% 45.1% 52.7% PPE / Revenue Capex spend during the year (INR M) 1,029 1,108 752 2,857 2,494
Slide 39: Suven+Cohance Combined Proforma P&L – Snapshot
Suven+Cohance Combined Proforma P&L – Snapshot INR million CAGR CAGR Combined Proforma P&L Snapshot FY20 FY21 FY22 FY23 9mFY23 9mFY24 FY20-FY23 9M YoY Revenue 16,969 20,140 26,004 26,779 19,056 16,903 16.4% -11.3% COGS (5,997) (7,024) (9,291) (9,283) (6,849) (5,495) Material Margin 10,972 13,117 16,
Slide 40: Suven+Cohance Combined Proforma BS – Snapshot
Suven+Cohance Combined Proforma BS – Snapshot INR million Simple addition Combined Proforma Balance Sheet Snapshot Mar20 Mar21 Mar22 Mar23 Dec22 Dec23 Property, plant and equipment (PPE) 7,354 8,499 9,396 10,059 9,756 10,169 2 Right of use asset (RoU) 22 105 193 372 363 732 Capital work-in-progress
Slide 41: Suven+Cohance Combined Ratios – Snapshot
Suven+Cohance Combined Ratios – Snapshot Key Ratios FY20 FY21 FY22 FY23 9mFY23 9mFY24 Basis Net Working Capital (as days of sales) 128 113 132 126 150 152 NWC / Revenue * no. of relevant days PPE (as % of sales) 43.3% 42.2% 36.1% 37.6% 38.4% 45.1% PPE / Revenue Capex spend during the year (INR M) 1,
Slide 42: Thank You
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