)
Strides Arcolab, had during December 2013 completed a transaction to sell its specialties business to Mylan for upto $1.75 billion and then had said that it had agreed to a contingent holdback of $250 million as USFDA had issued Warning Letters to one of the facilities of Strides which was being transferred to Mylan.
According to a regulatory disclosure from Strides, it had agreed to a final settlement of $150 million and further details will be provided during early October 2014. According to information available, Mylan had said that they would be paying out the additional $250 million only upon satisfaction of certain regulatory conditions.
The management of Strides had indicated that they are working closely with Mylan to clear the concerns raised by US FDA and were putting in efforts to be compliant with the guidelines stipulated for exporting a range of injectables into the US market. However, with Strides agreeing with a stunted $150 million settlement, it is likely that the concerns are still lingering and it would take more time to clear the hurdles.
Strides had earlier said that as and when they get the $250 million, they intend to share the proceeds with the shareholders in addition to the earlier dividend of Rs 500 per share which was distributed post the completion of the sale during December 2013. This setback of settling of a curtailed sum culled the stock price by a good almost 10% on NSE on Thursday and it closed at Rs 633.85 per share.
The issue of US FDA raising various issues on the standard of pharmaceutical exporters from India has been plaguing the industry over the past few years. Noted names including Ranbaxy and Wockhardt have been at the receiving end who have been repeatedly being pulled up over being lax in maintaining global standards and were penalised as well.
