Alembic Pharma forms JV to enter a difficult $100 bn Chinese market

Alembic hold 44% in partnership with China's SPH SINE Pharma, whose stake will be 51%. The JV will set up plant there

Vadodara-based Alembic Pharmaceuticals Limited on Tuesday announced a joint venture (JV) for entering the Chinese market, the world's second largest single country drug market after the US. Indian players like Dr Reddy's Laboratories have presence in the Chinese market while others like Cipla, Sun Pharma and Wockhardt are testing waters. 

The $100 bn Chinese market, estimated to be tough to crack, has recently shown signs of easing regulatory norms to encourage generic players to enter. 

Alembic Pharma has signed a JV with SPH SINE Pharmaceutical Laboratories Co Ltd, China (SPH Sine) & Adia (Shanghai) Pharma Co Ltd, China (Adia) for promotion and sales of its pharmaceutical products in the Chinese market. 

The JV will entail SPH Sine and Alembic holding 51 per cent and 44 per cent equity stakes, respectively. The other rest five per cent will be held by Adia for the JV which will see a registered capital of one million Chinese yuan (RMB) or roughly Rs one crore, to be contributed by the equity partners in proportion to their stakes. 

The JV will commercialize products in the Chinese market which has an increasing demand for generic drugs. "(The JV) will initially launch with a portfolio of oral solids and is expected to widen to other areas like injectable, ophthalmology, dermatology & oncology which are being currently developed and manufactured by Alembic," the company said in a filing to the exchanges.

Under the JV, the players will look to set up a manufacturing facility in China besides commercialising the existing products manufactured by Alembic Pharmaceuticals Ltd at its facilities in India. 

Recently, Aleor  Dermaceuticals Ltd, a 60:40 JV between Alembic Pharma and Orbicular Pharmaceutical Technologies Pvt Ltd received an establishment inspection report (EIR) from the United States Food and Drug Administration (USFDA) based on an inspection carried out at Aleor's Formulation Facility at Karakhadi in Gujarat in February this year.