Onesource Specialty Pharma Limited (NSE: ONESOURCE, BSE: 544292) has announced a comprehensive restructuring plan involving the merger of four companies, aimed at strengthening its position in the contract development and manufacturing operations (CDMO) sector.

Merger Details

The Board of Directors of OneSource Specialty Pharma has approved a composite scheme of arrangement and amalgamation that includes the following mergers:

1. Steriscience Specialties Private Limited (SSPL) into Brooks Steriscience Limited (BSL)
2. Brooks Steriscience Limited (BSL) into OneSource Specialty Pharma
3. Steriscience Pte Limited (Steriscience SG) into OneSource Specialty Pharma
4. Strides Pharma Services Private Limited (SPSPL) into OneSource Specialty Pharma

Share Exchange Ratios

The scheme includes specific share exchange ratios for the mergers:

• 137 OneSource shares for every 10 Brooks Steriscience shares
• 53 OneSource shares for every 100 Steriscience Pte shares

Impact on Shareholding

Post-merger, the shareholding structure of OneSource Specialty Pharma is expected to change significantly:

Strategic Rationale

The consolidation aims to achieve several strategic objectives:

1. Strengthen OneSource's CDMO capabilities by integrating sterile injectable operations
2. Add European manufacturing capabilities through Steriscience SG's Polish subsidiary
3. Enhance product and service portfolio
4. Leverage unified talent pool and established customer base
5. Improve operational efficiency and cost savings
6. Enable cohesive business strategies for global expansion

Financial Restructuring

As part of the scheme, OneSource will undertake financial restructuring to address past losses:

• Negative balance in Retained Earnings will be set off against the Securities Premium Account
• This move aims to reflect the company's true current financial health and potentially enable dividend payments in the future

Regulatory Approvals

The proposed scheme requires approvals from:

• Shareholders and creditors
• Stock exchanges (BSE and NSE)
• Securities and Exchange Board of India (SEBI)
• National Company Law Tribunal
• Singapore Court
• Other regulatory authorities

Financial Performance

OneSource reported standalone profits, marking a turnaround from previous losses. However, the company aims to address the impact of accumulated losses on its financial statements through the proposed restructuring.

Conclusion

The comprehensive merger and restructuring plan represent a significant step for OneSource Specialty Pharma in consolidating its position in the CDMO sector. While the scheme promises strategic benefits, its success will depend on obtaining necessary regulatory approvals and effective integration of the merged entities.

Investors and stakeholders will be closely watching the implementation of this ambitious plan and its impact on OneSource's future growth and profitability in the competitive pharmaceutical manufacturing landscape.

Onesource Specialty Pharma Limited (ONESOURCE) has reported robust financial performance for the first quarter, with significant growth in revenue and profitability. The company also announced potential strategic acquisitions to expand its global footprint and capabilities in the injectable pharmaceuticals market.

Q1 Financial Highlights

OneSource delivered a strong start to the fiscal year with the following key financial metrics:

• EBITDA Margin: Improved by 500 basis points to 27%
• Adjusted EPS: INR 3.20 per share on a fully diluted basis

The company's performance was driven by growth across all three business segments: drug-device combinations, injectables, and soft gelatin capsules.

Operational Highlights and Future Outlook

OneSource is accelerating its Phase 2 capacity expansion for drug-device combinations, aiming to reach 200 million cartridges by the end of 2026, up from the current capacity of 40 million units. This expansion is in response to increased customer forecasts and take-or-pay contracts, particularly for upcoming Semaglutide generic launches.

The company successfully completed 25 regulatory inspections across all sites and received USFDA and ANVISA approvals, reinforcing its commitment to quality and compliance.

Neeraj Sharma, CEO and MD of OneSource, stated, "We are very confident as our customers are over the next couple of years. The markets which are opening up early starting January next year, all the customers who are scheduled or planning to launch in all these markets, all have take-or-pay contracts."

Strategic Partnerships and Potential Acquisitions

OneSource announced a strategic partnership with Swedish biotech company Xbrane Biopharma, which is expected to strengthen its drug substance business and accelerate regulatory inspections of its drug substance site.

The company's Board of Directors has approved the evaluation of potential acquisitions of facilities in Poland and India. These acquisitions, if completed, could add combined revenue potential of $100 million by FY27, with EBITDA in the range of 36% to 40%.

Arun Kumar, Founder and Non-Executive Chairperson, commented on the potential acquisitions: "We believe that both these assets will add significant value to the long-term plans of OneSource, which obviously will also mean that our targeted revenue of $400 million with $160 million EBITDA will now have an upward trajectory in excess of $500 million and slightly in excess of $200 million of EBITDA."

Market Expansion and Product Pipeline

OneSource is well-positioned to capitalize on the growing demand for GLP-1 agonists and other injectable products. The company is working on 10 different molecules in drug-device combinations, with only three of these being GLPs, demonstrating its diverse portfolio.

The company has already manufactured Liraglutide and Teriparatide for European markets, with launches expected in the first half of the current fiscal year, subject to customer priorities.

Conclusion

OneSource Specialty Pharma Limited's strong Q1 performance, coupled with its strategic initiatives and potential acquisitions, positions the company for significant growth in the coming years. The company's focus on expanding its drug-device combination capabilities, along with its strong presence in the injectables market, is likely to drive its future success in the global pharmaceutical CDMO space.