Moneycontrol
May 18, 2017 05:55 PM IST | Source: Moneycontrol.com

Strides in JV pact with Vivimed, eyes bigger US generics play

The JV allows Strides to get access to Vivimed’s US FDA compliant formulation plant in Alathur, Tamil Nadu in addition to a portfolio of approved abbreviated new drug applications (ANDAs) and under development product pipeline for US market.

Strides in JV pact with Vivimed, eyes bigger US generics play

Strides Shasun on Thursday said it has formed a joint venture (JV) with Vivimed Labs which will help it to expand its generics business in US.

The JV allows Strides to get access to Hyderabad-based Vivimed’s US FDA compliant formulation plant in Alathur, Tamil Nadu in addition to a portfolio of approved abbreviated new drug applications (ANDAs) and under development product pipeline for US market.

For Vivimed Labs the deal will help to grow its presence in the US finished dosage formulation (FDF) business as it will take advantage of Strides' existing front-end in the US market.

Strides will be paying around Rs 75 crore in cash as part of the joint venture investment.

“This 50-50 JV in India will house the Viviemd's US FDA inspected FDF facility in Alathur, Tamil Nadu and the 50-50 JV in Singapore will house its current portfolio of ANDAs," a statement of Vivimed said.

The Alathur facility was acquired by Vivimed in 2013 and has successfully completed 2 US FDA inspections since then, in addition to expanding its capacity to 1.5 billion tablets per annum.

“This transaction is aimed at bringing scale to our presence in the US FDF market; this equal JBV brings together an optimum mix of our manufacturing strength, product development capabilities and Strides Shasun's front-end presence and marketing expertise,” Vivimed added.

The JV is in line with Strides recently articulated strategy of focusing solely on generics business specially targeting regulated markets. The JV allows a quick scale-up for Strides in US market at a time when US FDA has fast-tracked generic approvals through GDUFA (Generic Drug User Fee Act) route.

For Vivimed, which is into specialty chemicals, the deal helps it reduce debt. The company got into neck-deep debt as it went on an acquisition spree in Europe. The company has net debt-equity ratio of 1.47 as on end of FY16.

The coming together of Vivimed's US generic franchise and Strides Shasun is likely to multiply our strengths and, script a win-win equation for both the partners in the coming years.

Shares of Strides declined 2.83 percent to close at Rs 1025.90 on BSE, while Vivimed Labs ended down 1.44 percent to 113.10. The BSE Sensex dropped 0.73 percent to 30,434.79 points.
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