JB Chem exits Russia, sells remaining biz to Dr Reddy's

Drug-maker JB Chemicals has effectively exited the Russia and CIS markets.

In just two months after it sold its over-the-counter business to a Johnson and Johnson subsidiary for over Rs 900 crore – JB Chem has entered into an agreement to sell its prescription medicine portfolio as well, to Dr Reddy's Laboratories for Rs 137 crore.

After selling the OTC business, it was “prohibitively expensive” to maintain the smaller prescription drugs business of $22 million, as more investments would have been required to grow it, Mr Pranabh Mody, JB Chemicals and Pharmaceuticals' President and Whole-time Director (Operations), told Business Line .

The deal covers trademarks and inventory, though it is still unclear whether the 60-odd people with JB in Russia will also move to DRL, he added.

Though the balance sheet this year will see a dent as a result, company officials said that JB Chem would end the year with a turnover of over Rs 500 crore. A decision is yet to be taken on investing the funds, he said, adding that it would be in the pharmaceutical area, besides growing the existing domestic and rest-of–the-world markets. Meanwhile, DRL said the agreement involved the acquisition of 20 brands, including Metrogyl and Jocet.

The two companies have also entered into a supply agreement with JB Chemicals for the continued manufacturing and supply of these products associated with the acquired brands, for three years, Mr Mody said.

Russia and the CIS markets are not as simple as it looks, he said, adding that the receivables problem results in funds being blocked for between 180 to 240 days. DRL is the largest pharma company in Russia and its FY11 revenues from Russia and other CIS markets were Rs 1090 crore, up 19 per cent.

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