Financial Daily from THE HINDU group of publications
Wednesday, May 11, 2005
Financial Daily from THE HINDU group of publications Wednesday, May 11, 2005 |
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Corporate
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Mergers & Acquisitions Malladi Drugs acquires US-based Novus Our Bureau
(From left) Mr Prashant Malladi, Managing Director, Malladi Drug & Pharmaceuticals Ltd, Mr Amol Jain, Vice-President, Investment Banking/M&A, DSP Merrill Lynch, and Mr Aluri Srinivasa Rao, Director-Investments, ICICI Venture, at a press conference in Mumbai on Tuesday. - Shashi Ashiwal
Mumbai , May 10 THE Rs 80-crore Malladi Drugs and Pharmaceuticals has acquired the US-based Novus Fine Chemicals in a Rs 100-crore deal. The acquisition has been facilitated through strategic funding from a consortium of private equity investors, including ICICI Venture, Sander Morris Harris Group and IL&FS. Chennai-based Malladi is a large manufacturer of ephedrine and pseudoephedrine salts, used in cough and cold applications. The cross-border deal would help consolidate our position, Mr Prashant Malladi, Managing Director of the company, told mediapersons. The deal also brings into the Malladi-fold a bulk drug plant from the Novus stable. The company expects to clock consolidated revenues of Rs 200 crore in 2006, said Mr Malladi. Since both companies are in the bulk drug segment, the presence of a manufacturing plant in the US is expected to give Malladi an edge over other Indian and Chinese companies and other multinationals operating in the same segment. Pseudoephedrine is a controlled substance. Indian and Chinese companies are not able to freely export these bulk drugs to the US. As a result, US companies needing these substances buy them from suppliers in the US or Europe, and this is expensive, said Mr Aluri Srinivasa, Director, ICICI Venture. Malladi hopes to increase its presence in the controlled market as it will send drug intermediates in the uncontrolled version and the product can be completed in the bulk drug plant in the US, Mr Malladi said. Novus will procure the raw material from the Indian company and this will give it a cost advantage. The deal will give Malladi a front-end presence in the US to partner with innovator companies. This opens up an opportunity to contract manufacture even patented drugs, officials present at the media-interface said. The deal, structured by DSP Merill Lynch, has the three private equity firms pumping in funds through the issue of common stock. Novus will now be a wholly owned subsidiary of Malladi, Mr Prashant Malladi said. New chemical entity under development: Malladi is at present awaiting regulatory approvals from the Drug Controller General of India to commence phase I clinical trials on its new chemical entity used to dissolve blood clots, Mr Malladi told Business Line. He said approvals were expected "any time now", following which the first phase of trials on about 100 healthy human volunteers would start. Subsequently, the company will look to license out the drug and look to partner with a foreign company for further development of the molecule, said Mr Malladi.
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