In its first overseas acquisition, vaccine-maker Serum Institute of India has bought Bilthoven Biologicals in the Netherlands for a total consideration of over Rs 550 crore.

Serum has made an initial payment of €32 million (Rs 220 crore) for 100 per cent shares in the Government-run company, said Mr Adar Poonawalla, Executive Director of the Poonawalla Group and its flagship Serum Institute.

The total cost of the acquisition is about €80 million (Rs 552 crore) over a three-year period, that includes other liabilities in the company, Mr Poonawalla told Business Line . The liabilities include losses of about €30 million per year, he added.

Access to technology

The acquisition will give the Poonawalla Group and Serum access tounique technology to make the injectable polio vaccine (Salk). It also gives the Indian vaccine-major a manufacturing base in Europe with access to these markets, besides the US. But, this will take another five years or so, he said, after more capital infusion, clinical trials, and so on.

Located in Bilthoven, near Amsterdam, the manufacturing facility is spread over 20 acres, employs more than 200 people and has a production capacity of over 20 million doses of vaccines in a year.

A Dutch firm and a Chinese company were also in the race to acquire the company, but were deterred by the losses, he said.

Being a Government-run company, the acquiring company (Serum) had to have a public health objective, he said, and Serum met this criteria.

It is estimated that two out of every three children immunised across the world is vaccinated by a Serum vaccine.

Funding route

Serum would fund the acquisition through internal accruals, he said, adding that a small working capital loan had been taken from banks. The company clocked a turnover of Rs 1,700 crore and profits of Rs 700 crore in 2011-12.

The Dutch government did want to relocate its operations closer to a university and science park, but it was later decided to privatise the operations to keep it going, he said, on why the company was sold.