Drug firm Strides to buy out Aspen stake in JVs

BANGALORE - Leading Indian generic drug maker Strides Arcolab will buy out 50 percent of the stake Aspen Pharmacare Holdings Ltd of South Africa has in their two oncology joint ventures (JVs) for $117 million (Rs.532 million), the company said Thursday.

Post-acquisition, the two JVs-Onco Therapies Ltd India and Onco Laboratories Ltd Cyprus-will become subsidiaries of the Bangalore-based Strides.

As part of the deal, Strides will license the oncology drugs to Pharmacare Ltd, an Aspen group firm, for marketing in certain geographies to be earmarked when the transaction is completed by April 2011.

“The full ownership of the oncology JVs will enhance our manufacturing and development capabilities in the specialties business and consolidate our presence in the oncology market,” the company said in a statement here.

Oncology drugs are used in the treatment of cancerous tumours through surgery, chemotherapy, radiotherapy and other modalities.

The anti-cancer drugs segment is the largest in specialty pharmaceutical sector, whose market size is estimated to be $75 billion, with a cumulative average growth rate (CAGR) of 11 percent.

“The restructuring of the oncology arrangements with Aspen provides us greater focus and ownership of a key domain in our specialties division,” Strides chief executive Arun Kumar said in the statement.

According to Aspen chief executive Stephen Saad, the deal will enable both the partners to do what they are at best.

“Our focus is commercialisation of these niche products in our territories where we have been building our oncology product franchise. Stride products will significantly contribute in achieving this objective,” Saad said.

In light of the proposed acquisition, Strides has revised its guidance for this calendar year (CY 2010) 35-37 percent upwards to Rs.17.75-18.25 billion ($390-400 million) as against 25-30 percent projected Feb 24 over CY 2009 at Rs.13.28 billion.

“We see incremental growth coming this year from inorganic strategies, multiple product launches and licensing income in the core specialties business,” Kumar noted.

Early this month, Strides bought back its Brazilian facility for $75 million (Rs.341 million) from Aspen Pharmacare.

Strides, which produces a range of IP-led niche pharma products, including sterile injectables, has 14 manufacturing units across six countries and marketing presence in over 60 countries worldwide.

As Africa’s largest drug maker and among the top 20 generics manufacturers worldwide, Aspen supplies branded and generic products in about 100 countries the world over.