The Hindu Business Line : Matrix to acquire major holding in MCHEM

TAKING forward its strategic alliance with $35-million MCHEM Pharma (Group) Ltd of China, Matrix Laboratories Ltd (MLL) has signed a revised memorandum of understanding (MoU) with the former to acquire a major holding in its business in China.

While the first MoU signed on February 6 this year broadly provides for a joint venture relationship between the two companies, the revised MoU would facilitate the Hyderabad-based Pharma major, Matrix Labs to acquire 60 per cent of the ownership interest in MCHEM Pharma Group and four other associate companies.

According to Matrix Labs, the consideration for the acquisition of the ownership interest would be in cash or in kind or a combination of both, subject to the detailed due diligence and all the requisite approvals. Though the company did not specify the exact timeframe for completing due diligence exercise, sources said it would take at least a couple of months.

Based in Xiamen on the East coast of China, MCHEM Pharma Group manufactures pharmaceutical products ranging from basic chemicals, intermediates, active pharmaceutical ingredients and finished dosage forms, apart from interest in distribution of pharmaceutical product in China. It is currently a major supplier of finished dosage forms of anti-AIDS products to the Chinese Government.

The Medicines Control Council of South Africa approved the finished dosage forms facility of MCHEM Pharma. The Chinese company is currently focussing on therapeutic categories such as anti-AIDS, central nervous system, cardiovascular and oncology.

Matrix Labs said the decision to enter into China was part of its overall long-term strategy to become an end-to-end player and thus integrate both forward and backward. In line with this strategy, the company had acquired a finished dosage facility located in Nashik during January this year. The Chinese joint venture and proposed acquisition of major holding in Chinese partner's business is considered part of the company's initiative to backward integrate and further strengthen its supply chain.

On the revised plans for China, the Matrix Labs Chairman and Chief Executive Officer, Mr N. Prasad, said, apart from emerging as a fully integrated and cost effective pharmaceutical player, the combined strengths of Matrix and MCHEM would provide an opportunity to meet the unmet needs of certain emerging markets across the globe including China.

Commenting on the development, the MCHEM Pharma Chairman, Mr Mark Gao, said "MCHEM Pharma Group companies will provide the requisite base for Matrix Laboratories in China to leverage the advantages that our country offers in this field".

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