Natco Pharma may exit from pharmacy business in US

G. Naga Sridhar Hyderabad | Updated on March 24, 2011


Natco Pharma Ltd may exit from pharmacy business in the US soon.

The Hyderabad-based company, which currently operates SaveMart Pharmacy in Lancaster, Pennsylvania, US, is actively considering its sale, a senior company functionary told Business Line here.

“We are open to sale of SaveMart if we get a good price. The store is doing very well and has been voted as the best store in the country consistently for the last five years,” he said.

Natco plans exit from pharmacy business as it now has ‘no synergies' with company's business strategy.

“The original idea behind venturing into the pharmacy business was to sell our own products there. This is no longer required as we have entered into various strategic partnerships for that,” he explained.

Natco Pharma was the first Indian pharma company to enter into pharmacy business in the US in 2006 by acquiring 75 per cent stake in K & C Pharmacy, a general partnership firm based in New Jersey, US, with a retail pharmacy outlet, Nicks' Drugs.

Subsequently in 2007, it acquired SaveMart Pharmacy through its wholly-owned subsidiary, Natco Pharma Inc, which had recorded a net profit of Rs 1.11 crore in the year ended March 31, 2010 as per the company annual report.

However, in 2009-10, Natco suffered a loss of Rs 2.31 crore in K & C Pharmacy due to budgetary restrictions on the State Governments in the US and dip in medical reimbursements.

In January 2011, K & C Pharmacy sold Nicks' Drugs. Explaining the sale, Natco said it was due to significant reductions in medical aid in the US.

There would be no significant impact on the revenues and profitability of Natco due to sale, it maintained.

“The case of SaveMart is different because it was not dependent on medical aid reimbursements and has been profitable all along,'' the Natco functionary said.

In the present financial year, the revenue from SaveMart was about Rs 81 crore ($18 million) which a major chunk of revenue as Natco was expecting to close the year with about Rs 500 crore.

Natco Pharma's scrip gained 0.04 per cent to end at Rs 255.35 on BSE on Thursday.

Published on March 24, 2011

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