Akums Drugs bags ₹1,760 cr deal with European pharma; stock jumps 5%

Shares of Akums Drugs and Pharmaceuticals rallied up to 5% in intraday trade on Tuesday after it signed a ₹1,760 crore CDMO (Contract Development and Manufacturing Organisation) pact with a global pharma major for European supply. The deal pertains to manufacture and supply of selected pharmaceuticals formulations in European market.

Boosted by the development, shares of Akums Drugs gained 4.6% to hit an intraday high of ₹625.55 on the BSE. Early today, the stock opened higher at ₹604.80, up 1.1% against the previous closing price of ₹597.95.

At the time of reporting, Akums Drugs shares were trading 0.7% lower at ₹593.70, paring early gains, with a market capitalisation of ₹9,344.5 crore. At the current level, the stock trades at a 12.5% discount over the IPO price of ₹679 per equity share.

The smallcap pharma stock, which made its market debut on August 6 this year, trades 49% lower than its record high level of ₹1,174.85 on August 20, 2024. The counter touched its 52-week low of ₹527 on November 19, 2024. It has fallen 25% in the last six months and 12% in a month.

“Akums Drugs and Pharmaceuticals Limited has entered into an agreement with one of leading global pharma company for manufacture and supply of selected pharmaceutical formulations in European market,” it says in a BSE filing today.

The release notes that Akums group will manufacture and supply multiple specific stock keeping unit (SKUs) of oral liquid formulation to be marketed in multiple European countries by the company. Akums group, against this agreement, has been secured with an upfront payment of Euro 100 million (₹880 crore) for product development and site approval from European authorities.

As per the company, the deal is in line with Akums growth objective of expanding in European and other regulated markets. The commercial supply of these products from Akums will commence in 2027 till 2032.

“Akums group will also initiate European approvals of its oral liquid site which it intends to leverage to manufacture these products. The approval of the site and the product dossiers is expected to be received by 2026,” it says.

The company already has 2 of its sites (injectable and oral solids) approved by European regulators.

Speaking on this development, Sanjeev Jain, Managing Director of Akums added “It gives us immense pleasure to enter in a strategic collaboration to manufacture and supply a globally renowned brand for one of the largest multinational pharma company. This opens doors for us to further expand our footprints in regulated markets and replicate the domestic CDMO success globally.”

Promoted by Sanjeev Jain and Sandeep Jain, the CDMO raised ₹1,857 crore via IPO at market capitalisation of ₹10,687 crore, which received a strong response from investors, with the issue subscribing by 63.44 times. The public issue of the drug maker was a combination of a fresh issue of equity shares worth ₹680 crore and an offer-for-sale (OFS) of 1.73 crore shares worth ₹1,177 crore by promoters and an existing investor. 

Ahead of the IPO, the company raised secured ₹828.78 crore in investments from 50 anchor investors by issuing 1.22 crore equity shares.

The company intends to use IPO proceeds from fresh equities to repay debt of the company and its subsidiaries - Maxcure Nutravedics and Pure and Cure Healthcare. A part of the fund will be used to meet working capital requirements, and acquisitions for inorganic growth, and for general corporate purposes.

Established in 2004, Akums has manufactured 4,025 commercialised formulations across over 60 dosage forms. During the financial year 2023, it manufactured formulations for 26 of the leading 30 pharmaceutical companies in terms of sales in India, as per F&S report mentioned in the DRHP. The company counts Alembic Pharma, Alkem Lab, Cipla, Dabur India, Dr. Reddy’s, Ipca Lab, Mankind Pharma, MedPlus Health Services, Micro Labs, Mylan Pharmaceuticals, Natco Pharma, Sun Pharma, UCB, and The Mom’s Co, among its key clients for CDMO business.

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