Nirma Limited

COMPETITION COMMISSION OF INDIA Combination Registration No. C-2023/10/1064

19th December 2023

Notice under Section 6(2) of the Competition Act, 2002 given by Nirma Limited

CORAM:

Ms. Ravneet Kaur Chairperson

Mr. Anil Agrawal Member

Mr. Deepak Anurag Member

Order under Section 31(1) of the Competition Act, 2002

1. On 18th October 2023, the Competition Commission of India (Commission) received a notice (Notice) under Section 6(2) of the Competition Act, 2002 (Act), given by Nirma Limited (Nirma). The Notice was given pursuant to the execution of a Share Purchase Agreement (SPA) between Nirma, Glenmark Life Sciences Limited (Glenmark Life Sciences), and Glenmark Pharmaceuticals Limited (GPL) on 21st September 2023.

2. The Commission, vide its communication dated 30th October 2023, 1st November 2023, and 17th November 2023, issued under Regulation 14(3) of the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 required Nirma to remove defects from the Notice and furnish certain information relevant for the purpose of assessment of the proposed combination. Nirma furnished its responses vide submissions dated 6th November 2023, 9th November 2023, and 28th November 2023. Nirma also made submissions dated 8th December 2023, 14th December 2023, 18th December 2023, and 19th December 2023.

3. The proposed combination envisages an acquisition of up to 92.17% shareholding (on a fully diluted basis) of Glenmark Life Sciences by Nirma as under:

• Secondary Purchase: Nirma will purchase 74.84%1 shareholding [on a fully diluted basis, assuming the exercise of vested Employee Stock Options (ESOPs)] of Glenmark Life Sciences from GPL; and

• Open Offer Acquisition: Nirma will purchase up to 17.33% shareholding of Glenmark Life Sciences (on a fully diluted basis, assuming the exercise of vested ESOPs) from the public shareholders of Glenmark Life Sciences by way of an open offer which will be triggered under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (Takeover Regulations).

The Secondary Purchase and Open Offer Acquisition are hereinafter collectively referred to as the Proposed Combination.

4. Nirma is wholly owned by Dr. Karsanbhai K. Patel and his family members (Acquirer Promoter Group). Nirma has a presence in India and the USA. The Indian operations comprise soda ash, soaps and detergents, salt, caustic soda, linear alkyl benzene and other industrial products.

5. Glenmark Life Sciences, a listed company, is engaged in the business of: (i) development, manufacture and sale of Active Pharmaceutical Ingredients (APIs) and intermediaries2 (used as an input to APIs) and (ii) Contract Development and Manufacture Organisation (CDMO) services for APIs. Glenmark Life Sciences has a portfolio of over 130 APIs serving chronic therapeutic segments like cardiovascular disease, central nervous system disorders, pain management, and anti-diabetics.

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1 Nirma will purchase 91,895,379 shares representing 75% of Glenmark Life Sciences' share capital. The figure of 75% is based on the current issued and paid-up equity share capital of Glenmark Life Sciences. Glenmark Life Sciences has also issued outstanding ESOPs that are vested but not exercised. Assuming the exercise of such vested ESOPs as of the date of the SPA, the figure becomes 74.84%.

2 The intermediaries produced by Glenmark Life Sciences are captively consumed by Glenmark Life Sciences and not sold in the open market.

6. APIs are the essential chemical compounds used in the manufacturing of any finished formulation drug product. Aculife Healthcare Private Limited (Aculife) and Stericon Pharma Private Limited (Stericon), portfolio companies of the Acquirer Promoter Group, are engaged in the manufacturing of formulations. While certain APIs manufactured by Glenmark Life Sciences could potentially be used by Aculife in formulating some of its products, Glenmark Life Sciences does not produce any APIs suitable for Stericon's formulations.

7. It has been submitted that two APIs of Glenmark Life Sciences viz., Fluconazole and Iron Sucrose (also called as Iron Ferric) can potentially be used by Aculife for manufacturing its existing formulations. Further, Aculife has the formulations relating to the APIs viz., Ferric carboxymaltose, Brivaracetam, Ferumoxytol, Arformoterol Tartrate, Azelaic Acid, Colistimethate sodium, Lifitegrast, Mirabegron, Olopatadine HCl, Sertaconazole Nitrate, Solifenacin Succinate, Tadalafil, Tavaborole, Terbinafine HCl, Trospium Cl, Voriconazole, and Efinaconazole in the pipeline which are in various stages of research and development, regulatory approvals, clinical trials, etc. These formulations could be launched in the market in the next 2-5 years. However, the launch of these formulations is contingent upon the success of the aforesaid activities of research and development, regulatory approvals, clinical trials, etc. The aforementioned APIs of Glenmark Life Sciences do not exhibit a vertical interface with any products (formulations) that are currently manufactured by Aculife. However, there is a possibility that should Aculife's currently planned products under research and development come to market, these APIs could potentially be utilized in their manufacture.

8. With regard to Efinaconazole, it has been further submitted that Efinaconazole (both as API and in molecule form) is not approved for sale in India at all. Efinaconazole API can be manufactured in India and exported to other countries, after seeking necessary permissions from the respective state government authorities for Food Safety and Drug Administration, against a purchase order received from the customer. Glenmark Life Sciences manufactures Efinaconazole in India for exclusive sales to entities outside India and does not sell Efinaconazole within India.

9. The Commission notes that the market presence of Aculife for Iron Ferric/Sucrose is not significant. Further, the Iron Sucrose API is not offered for sale by Glenmark Life Sciences in the wider market in India. Aculife's formulations for fluconazole are not sold in India after FY 2017 – 18. The market share of Glenmark Life Sciences, both in terms of quantity and value of sales to domestic customers excluding GPL, for fluconazole API is less than 5%. For pipeline formulations, Aculife is yet to enter and position itself in the market. Out of 16 APIs for pipeline products of Aculife, 9 APIs have not been sold by Glenmark Life Sciences during FY 2022 – 23. For the remaining 6 APIs, the market share of Glenmark Life Sciences, both in terms of quantity and sales to domestic customers excluding GPL, for FY 2022 – 23 is less than or around 5%. The market share of Glenmark Life Sciences for the remaining API viz., Arformoterol is [10-15]% and [20-25]% in terms of quantity and value, respectively. Arformoterol APIs business is characterised by the presence of other players such as Manus Aktteva Biopharma, Ralington Pharma, Cipla Inc., and Jigs Chemical.

10. Considering the material on record, including the details provided in the Notice and the assessment of the Proposed Combination based on factors stated in Section 20(4) of the Act, the Commission is of the opinion that the Proposed Combination is not likely to have any appreciable adverse effect on competition in India in any of the relevant market(s), and therefore, the Commission hereby approves the Proposed Combination under Section 31(1) of the Act.

11. This order may be revoked if, at any time, the information provided by Nirma is found to be incorrect.

12. The information provided by Nirma shall be treated as confidential in terms of and subject to provisions of Section 57 of the Act.

13. The Secretary is directed to communicate this order to Nirma.