The Hindu Business Line : Strides Arcolab forays into anti-cancer product segment

Oncology foray
To invest Rs 128 cr to set up an anti-cancer product facility in Bangalore
To develop 32 products initially over the next 12-18 months
Commercial sales expected in 2009

Our Bureau

Bangalore, Nov. 20 Strides Arcolab Ltd announced a foray into the growing anti-cancer products segment through a 50:50 venture with South African ally, Aspen Pharma.

The Bangalore-based generics player said it was also picking majority stakes in two overseas companies owned by Aspen for around Rs 43 crore. In turn, Aspen would become Strides’ equal regional partner in Latin America, from where 30 per cent of its Rs 760-crore revenue comes.

Strides would invest around Rs 128 crore ($32 million) to set up an anti-cancer product facility in Bangalore in the next eight months, Mr Arun Kumar, Vice-Chairman & Group CEO, Strides Arcolab Ltd, told in a conference call.

Aspen will invest nearly Rs 170 crore to acquire stakes in two of Strides’ oncology related subsidiaries — Onco Therapeutics Ltd and Cyprus-based IP outfit Powercliff.

UK Foothold

For Strides, a 51 per cent stake in Aspen-owned generics company Co Pharma for Rs 23 crore will mean a promising entry into the UK market with a potential of 55 products, he said. By the other, Strides will get 80 per cent shares of Formula Naturelle (Pty) Ltd, a South African nutraceuticals company fully-owned by Aspen, for Rs 19.7 crore .

Latam entry

For the Latam entry, the South African generics partner will acquire 50 per cent stake in Strides’ subsidiary for $58.5 million (Rs 234 crore). It will also seek fresh shares for $94 million (Rs 376 crore).

For the oncology tie-up, Aspen will pick 49 per cent of the share capital in Onco Therapeutics and debt instruments for $16.7 million (Rs 66.8 crore). It will buy 50 per cent of Powercliff for $25.75 million (Rs 103 crore)

“The transactions will result in net cash flows for Strides of over Rs 300 crore in the near term ($75 million after acquisition costs),” he said. Strides’ Latam operation has been valued at over Rs 1,000 crore.

Oncology In 2008

The anti-cancer joint venture will develop, manufacture and commercialise a “significant pipeline” of initially 32 products over the next 12-18 months for the growing Indian and global oncology market.

Strides, as a key player in injections, steriles, vials and tablets, would focus on new delivery systems rather than new drugs while aiming to have a complete basket with older drugs too.

Mr Arun Kumar said, “Oncology is a new business and the joint venture will help us grow a new segment. Commercial sales will happen in 2009, post facility approvals.” The joint venture has been valued at $85 million (around Rs 340 crore). Strides, which recently entered the domestic turf, has the national marketing rights.

The deal, expected to be formalised in four-six months, is subject to signing of legal agreements, receipt of the requisite regulatory approvals from RBI and bankers for Strides and from the Exchange Control of the South African Reserve Bank;

Aspen is a key global player in generic anti-retrovirals to treat HIV/AIDS. It also has two joint ventures for active ingredients with Matrix Labs, Hyderabad.

A release quoted Mr Stephen Saad, Group CEO, Aspen, as saying the manufacturing and development partnership with Strides in Africa and Australasia was being extended to Latin America, global oncolytics, Co-pharma in the UK and Nutriceuticals in South Africa.

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