Dr Reddy's sells Hyderabad API unit to Neopharma JV in lump sum deal

Dr Reddy's Laboratories Limited on Monday announced that it has entered into a definitive agreement for the sale of its active pharmaceutical ingredients(API) manufacturing business unit located in Jeedimetla, Hyderabad, to Therapiva Private Limited. This divestiture is being done by way of slump sale and includes all related fixed assets, current assets and current liabilities, and its employees, according to the company.

"The divestiture of our API manufacturing business unit is a step towards streamlining our manufacturing operations and optimising our cost structures," said Sanjay Sharma, executive vice president and head, global manufacturing operations at Dr Reddy's. 

Therapiva Private Limited is a joint venture between Omnicare Drugs India Private Limited, a subsidiary of Neopharma LLC, Abu Dhabi and Laxai Life Sciences Private Limited. " This acquisition represents a unique opportunity to further strengthen Therapiva's position as a premier supplier of APIs. There is a strong cultural fit between our companies and we are excited to welcome the employees of Dr Reddy's to accelerate our ambitious growth plans," said Vamsi Maddipatla, CEO of Therapiva and Laxai Life Sciences.

The slump sale involves sale of a business unit for a lump sum consideration without values being assigned to the individual assets and liabilities.

It may be recalled that earlier this month Dr Reddy's had sold its anti-biotic manufacturing facility in Bristol, Tennessee, to Neopharma citing similar reasons. While the deal value was not disclosed in either of these two sale transactions, the analysts estimated that the Hyderabad pharma major was likely to get $ 50-$70 million from the sale of its US manufacturing unit.

Dr Reddy's has several API manufacturing facilities that essentially cater to the in-house needs. The company also sells these APIs to several leading companies in the US, Europe, Latin America, Japan and other emerging markets as part of its PSAI (pharmaceutical services and active ingredients) business.