Drugmaker Cipla is to transfer its generics business as a going concern on a slump sale basis to Cipla Pharma and Life Sciences Limited (CPLS), its wholly owned subsidiary, for ₹350 crore, subject to approvals.
Cipla’s board of directors have approved the transfer, however, the business transfer agreement is yet to be executed, as the transaction is subject to approval from the CPLS board as well, the company told the stock exchanges. The transfer is set to be completed on December 31, 2023, or any date mutually agreed between them, it added.
The development comes even as Cipla promoters are said to be looking to sell their stake in the company. The company has dismissed reports of a possible stake sale as “speculation”, though the latest internal streamlining of businesses has sparked interest again, if it was paving the way for such activity. The company, has however not indicated any such intent in this announcement. It has said, there would be no change in its shareholding pattern, after the generics business sale.
rationale behind move
Giving the rationale behind the move, Cipla said, the generic market was expected to grow at a fast pace and it was one of the largest players in the generics business. The move was being undertaken “to provide agility, singular focus and faster decision making,” it added.
“The transaction will help in capitalising on this high growth potential business by increasing investments in new launches, deepening penetration in Tier 2-6 towns/cities and improving patient access through high quality Generic medicines,” the company said.
The generics business at Rs 1445 crore, accounts for about 9.95 percent of Cipla’s turnover at ₹ 14,519 crore. CPLS was incorporated im August 2008, no details were available on the number of people who may also be transferred to this company, once the transaction is cleared.