Strides Pharma share price falls over 3% on plans to spin off CDMO, gelatin biz into separate entity

Strides Pharma Science share price declined over 3% in early trade on Tuesday after the company announced to spin off its CDMO (Contract Development and Manufacturing Organisation) and soft gelatin businesses into a new entity. Strides Pharma shares fell as much as 3.22% to Rs 518.40 apiece on the BSE.

Strides Pharma share price was down 5.5% from its 52-week high of ₹549.00 apiece hit on September 25.

In a regulatory filing on Monday, the company said its board has approved a scheme of arrangement among group entities to combine identified CDMO business of Strides, the identified CDMO business of Steriscience and the soft gelatin business under Stelis under one entity called OneSource.

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The company's board intends to build a specialty pharmaceutical contract development and manufacturing organisation with capabilities in biologics, oral soft-gels, complex injectables, sterile injectables, including other complex drug delivery systems, Strides Pharma Science said.

In this regard, it is proposed to combine the identified CDMO business of Strides and the identified CDMO business of Steriscience under Stelis, it added.

The new platform will be able to offer development and manufacturing services covering platform technologies, speciality injectables, complex generics, biosimilars, and biologics, it added.

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“We expect this company to be formed through the NCLT process in the next 12 to 18 months considering that there are multiple companies being merged and demerged into the structure,” Strides Pharma Science Executive Chairperson and Managing Director Arun Kumar said in a conference call.

More importantly, the company will end up in the next three to four years as a very powerful CDMO entity in the pharma space, he added.

As per the swipe ratio of 1:2, Strides Pharma shareholders would receive 1 share of OneSource for every 2 shares of Strides. The implied value of proposed shares issued by OneSource to Stride's shareholders is ₹364 per share.

As part of the process, Strides shareholders will own 44% of OneSource. The scheme of arrangement is expected to be completed by April 1, 2024.

Strides expects the OneSource business to achieve sales between $180-200 million in FY25.

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As part of the process, Strides will demerge the oral soft gelatin business and identified the CDMO business into Stelis. Upon demerger, the shares of Stelis held by Strides will be cancelled, and shareholders of Strides will become shareholders of Stelis.

SteriScience, the promoter group company, will demerge sterile injectables CDMO business into Stelis.

Pursuant to the demerger, Stelis will issue equity shares to the shareholders of Strides and SteriScience on the recommended share entitlement ratio determined by an independent valuer, Strides Pharma Science noted.

At 10:45 am, Strides Pharma shares were trading 0.62% higher at ₹538.95 apiece on the BSE.

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(With inputs from PTI)