Drug maker Sanofi India has sold its Ankleshwar manufacturing plant to European pharmaceutical company Zentiva for Rs 261 crore as a part of its long-term strategy. Sanofi will use the sale proceeds for further business development and to reward shareholders, the company said today.
The company's manufacturing plants in Ankleshwar (Gujarat) and Goa produce drugs for both, the domestic market and exports. Sanofi supplies generic drugs to Zentiva from its Ankleshwar plant as a part of a five-year deal. The sale of the unit would translate into an estimated average annual revenue loss to the company of about Rs 470 crore. Sanofi plans to mitigate this loss of profit in due course through renewed focus on its core activities and brands, the firm informed the stock exchanges today, without elaborating.
Set up in 1987, the Ankleshwar plant produces brands like painkiller Combiflam and anti-allergy drug Allegra. The unit contributed to about 34 per cent of Sanofi's revenue and 13 per cent of its net worth in last financial year. The company reported a revenue of Rs 2,860 crore last fiscal. Sanofi said production of its well-known brands will now be shifted to its Goa plant and external manufacturing sites.
"All of the 600 Sanofi employees at the Ankleshwar site will move to Zentiva on terms that are not less favourable than their current terms," a Sanofi spokesperson said. The company hopes to conclude the transaction by next March. The company board will consider the best utilisation of proceeds for business development including distribution to shareholders in an appropriate manner, she added.
Shareholders, however, were not impressed with the announcement and the stock shed 4.37 per cent to close at Rs 5,990 on BSE on Wednesday.
Sanofi's generic drug business in Europe was housed in Zentiva and was acquired by Advent International last year. Sanofi India's managing director, Rajaram Narayanan, said the plant sale is a part of company's long-term focus to manufacture and sell its own brands. It also helps address the issue of excess capacity once the five-year drug sale deal comes to an end, and help improve asset efficiencies. The board has approved the sale as it is the interest of all stakeholders, Narayanan added.
Zentiva's chief executive officer Nick Haggar the Ankleshwar site will be the largest in the company's network and that the team in India will play a central role in the company's operations.