Temasek-backed Accuron divests Singapore's Veredus Labs to Japan's Sekisui Chemical

Singapore

SEKISUI Chemical, a high-performance plastics giant based in Japan, is acquiring homegrown Veredus Laboratories, a molecular diagnostics kit maker, in one of the largest-ever exits in the local medtech space.

Veredus Laboratories was started by Dr Rosemary Tan in 2003, to commercialise locally developed technologies that makes sense of the human genetic makeup. Dr Tan has a PhD in molecular immunology. The company's products include chips that test for the Zika and Dengue viruses.

The size of the deal was not disclosed, but market sources said it could be close to the US$83 million that Luminex paid for molecular diagnostics firm Nanosphere in 2016.

The Veredus sale also marks the second exit for Accuron MedTech, the medical device maker and medtech investor backed by Temasek Holdings. Accuron has invested in 10 companies in the last three years, including Taipei-listed Aslan Pharmaceuticals, which is developing cancer drugs.

Accuron acquired a 51 per cent stake in Veredus in 2014. STMicroelectronics also owned a 16 per cent stake in Veredus.

Under Accuron MedTech's ownership, Veredus has grown its revenues by 30 per cent and doubled its research and development (R&D) headcount.

Veredus also moved its global bio-chip manufacturing facility from Italy to Singapore and expanded into large new markets including Indonesia and China. Today, it spends about 25 per cent of its revenue on R&D. It generated S$9.7 million in sales in 2016, and an operating profit of S$1.6 million.

Dr Rosemary Tan told The Business Times: "We are very excited moving forward to work together with a global player to move to the next level. We have the technology, but we are very small, with about 45 employees in Singapore. Sekisui is very big and is looking for new areas to grow.

"We want to be a global player and the only way to do that is to align our interests with a big global player so that we can move together. It has been a great journey for me, I will continue to be the CEO and director of Veredus, and continue to chart its growth."

Abel Ang, group chief executive of Accuron MedTech, told BT: "The fact that Rosemary is able to exit in this fashion is a win. Today in deep tech, we don't have these icons of people who exited. These are not companies that you start today and tomorrow you flip them. This is not a Grab story.

"The fact that she is exiting well will allow her to be an icon for the waves of (deep tech) entrepreneurs that are going to come after her," he said.

Goichi Tsuchihashi, director and managing executive officer for Sekisui Medical's diagnostics business unit, said: "The acquisition of Veredus is an important step in realising our mid-term business plan, a focus of which is to enter into new, important markets in Asia which have high growth potential in the diagnostics industry." According to Sekisui's annual report, net sales hit 1,065 billion yen (S$12.3 billion) for FY2016.

Veredus continues to invest in R&D efforts across its various product lines. These include chips that test for tropical viruses such as Zika and Dengue, chips that test food samples like beef for bacteria, as well as biosurveillance tests that test air samples for biological weapons such as anthrax and smallpox.