Span Diagnostics sells India business to Japanese firm Arkray

Arkray, a leading diagnostic major in Japan, has acquired the Indian business of Span Diagnostics Ltd, a listed company.

According to people in the know, the management of Span Diagnostics had signed the deal comprising major business of in vitro diagnostics (IVD) on a slump sale basis with Arkray Healthcare, the Indian affiliate of the Japanese company. The deal size is estimated at Rs 100 crore.

Under the agreement, Veeral Desai, one of the promoters of Span Diagnostics, will continue as managing director. Singhi Advisors has advised Span Diagnostics, while Mizuho Securities worked for the buyer.

At present, the IVD industry accounts for about 2.5 per cent (Rs 2,000 crore) of the Rs 80,000-crore Indian healthcare market. The IVD reagent market size is pegged at Rs 700 crore and the IVD instruments market size is Rs 1,400 crore. The industry is growing at 15 per cent a year.

Roche Diagnostics, Abbott, Tulip Group and Transasia Biomedical are some of the top manufacturers in IVD sector.

Pradip Desai, a pathologist, had launched Desai Laboratories, later renamed Span Diagnostics in 1976. The Surat-headquartered company, which has an FDA-licensed production unit, is equipped with state-of-the-art manufacturing facilities.

Currently, Span Diagnostics has a nationwide sales and distribution network and also exports its products to more than 60 countries. It has been supplying HIV test kits for National AIDS Control Programme and Malaria test kits for Malaria Control programme. On Thursday, shares of Span Diagnostics were touched its upper circuit (up five per cent) at Rs 29.4.

Arkray had entered India in 2008 through a venture with Nicholas Piramal India. The company used to sell diagnostic products, mainly self-monitoring blood glucose system. Under the agreement, Nicholas Piramal had transferred all its existing blood glucose monitoring business for $40 million.