Drug-maker Cipla has made a $220-million (Rs 1,200 crore) offer to acquire 51 per cent in South Africa’s Cipla Medpro, a move that will give the company a direct connect to consumers in that country.

Cipla does not hold equity in the South African company, but has a supply arrangement with it. It has offered South African Rand 8.55 for every share of Cipla Medpro.

Cipla is open to opportunities that will bring in greater value, S. Radhakrishnan, Executive Director, Cipla, told Business Line, adding that there has been a change from the earlier supplier-centric thinking. The move will help Cipla integrate the marketing or front-end arm in South Africa with its manufacturing, regulatory and research units, he said. Over 90 per cent of Cipla Medpro’s supplies are from Cipla, he added.

On the timing of Cipla’s move, he said, there was no link with the resignation of Cipla Medpro’s Chief Executive, last month, for reasons including being involved in financial irregularities. Those were internal issues, Radhakrishnan said, delinking the development from its acquisition proposal. The funds will be raised internally, he added.

In fact, Cipla has been looking at formalising its marketing alliance for some time now. Last year, Cipla’s board was to take up a technology-for-equity investment proposal in Cipla Medpro’s manufacturing subsidiary. But that did not take off.

Cipla Medpro, which is listed on the Johannesburg Stock Exchange, has a $220-million turnover and a $40-million bottomline. The company has a manufacturing facility in Durban and about 400 employees, he said, adding that the proposal still needs board, shareholder and regulatory approvals.

On Wednesday, Cipla shares were up close to 10 per cent at Rs 389 on the BSE.


(This article was published on November 21, 2012)
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