Glaxo’s Supplier Plans Pakistan’s Largest Pharma IPO
(Bloomberg) -- Citi Pharma Ltd., a raw material supplier to the Pakistani units of GlaxoSmithKline Plc and Abbott Laboratories, plans to raise as much as 2.85 billion rupees ($18 million), in potentially the biggest initial share sale by a drugmaker in the nation.
The Lahore-based company plans to sell shares within the next six weeks, according to Chief Executive Officer Rizwan Ahmad. The initial public offering may exceed the 2.8 billion rupees raised by AGP Ltd. in 2017, according to data compiled by Bloomberg.
Citi Pharma, which makes active pharmaceutical ingredients, or APIs, is joining a global rush to raise capital as equity markets surge. The nation’s benchmark KSE-100 Index has gained about 70% since March 25 when countries across the world began lockdowns, helping revive the nation’s IPO market, which is poised for a record year.
The company will use about two-third of the IPO funds to build a 50-bed hospital in Lahore. The balance will be used to help construct two new plants, which will start operations by the end of this year, said Finance Director Amir Zia.
The expansion will allow the company to start manufacturing branded drugs. It will also make medicines for other companies. It is already in talks with Glaxo, Searle Co., and Martin Dow, said Ahmad.
The company’s production facility near Lahore that spans 47 acres – about 24 soccer fields -- was acquired from the Army Welfare Trust in 2012. The latest expansion will give it capacity to produce over 10 million tablets and capsules a day.
The company’s revenue has increased 36% annually on average, while gross margins have remained at about 13% in the past five years. That measure will rise as the company begins selling branded generics, Zia said. The company forecasts revenue will increase more than three times to 12 billion rupees by the year ending June 2023.
The company plans to offer 35% of its equity by selling 72.7 million shares at 28 rupees a share with an upper limit of 40%, according to its financial adviser Topline Securities Pakistan Ltd.
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