Mankind Pharma, the maker of Manforce condoms, has filed its draft red herring prospectus for an initial public offering with market regulator SEBI (Securities and Exchange Board of India).

The IPO, which is expected to be one of the largest ever by a domestic pharma firm, comprises an offer for sale (OFS) of 4 crore equity shares by the company's promoters and existing shareholders. The promoters of the company include Ramesh Juneja, Rajeev Juneja, Sheetal Arora, Ramesh Juneja Family Trust, Rajeev Juneja Family Trust and Prem Sheetal Family Trust.

The entire proceeds from the offer will be paid to the selling shareholders in proportion of the equity shares offered by the selling shareholders in the offer for sale and the company will not receive any proceeds from the offer, the draft prospectus says.

In 2015, Capital International had bought an 11% stake in Mankind Pharma from ChrysCapital for $200 million. In April 2018, a ChrysCapital-led consortium, which included GIC of Singapore and Canada Pension Plan Investment Board, again purchased a 10% stake again for around $300 million.

The public issue comes at a time when the IPO market has lost momentum, Fortune India reported earlier this week. In the calendar year 2022 (till August), as many as 51 companies raised ₹38,155 crore in capital through the primary market as compared to 55 companies with an issue size of ₹64,768 crore during the same period of last year. Total issuances in the calendar year 2021 (CY21) touched a record high of ₹1,21,680 crore (highest since CY17), which was in sync with the secondary market that witnessed a strong uptrend with the equity benchmark Sensex touching a new heights of 61,765 on October 18, 2021.

India's pharmaceutical sector is expected to log a moderate revenue growth of 7-9% this fiscal, similar to the last fiscal, due to headwinds in export sales in the regulated markets and high-base effect in the domestic formulations business, according to rating agency CRISIL.

Operating profitability of the pharmaceutical industry will shrink another 200-250 basis points (bps) after the 130 bps decline last fiscal due to continued pricing pressure in the US generics market, and high input and freight costs which offset moderate revenue growth, shows a CRISIL study of 184 drugmakers that account for around 55% of the ₹3.4 lakh crore-a-year sector revenue.

Incorporated in 1991, Mankind Pharma's brands include Prega-News pregnancy testing kits, Manforce condoms, Gas-O-Fast ayurvedic antacids and acne-treating medicine AcneStar among others.

For the financial years 2020, 2021 and 2022, the company's revenue from operations in India amounted to ₹5,788.8 crore, ₹6,028 crore and ₹7,594.7 crore, respectively, representing 98.70%, 97.01% and 97.60%, respectively, of its total revenue from operations. After India, its major markets are the US, Bangladesh, Sri Lanka and Nepal.

JP Morgan, Jefferies, IIFL Capital, Axis Capital and Kotak Mahindra Capital are the investment banks working on the IPO.

Mankind Pharma DRHP

Mankind Pharma files draft prospectus for IPO