Strides partners Aspen in Latin America market

Strides Arcolab, Bangalore-based exporters of branded generic pharmaceutical products is selling 50 per cent stake in Strides Latina, a Latin American subsidiary, to Aspen of South Africa for $152.5 million. The company also in a series of strategic partnerships with Aspen plans to develop oncology and generic products.

Aspen is South Africa-based pharmaceutical manufacturer and a supplier of branded pharma, healthcare and nutritional products in southern Africa and has businesses in Australia, India, UK and USA.

Announcing this on Tuesday, Arun Kumar, vice-chairman and group CEO, Strides Arcolab said "Aspen will acquire a 50 per cent interest in Strides Latina, a wholly-owned subsidiary for Latin American operations through the acquisition of shares from Strides subsidiary for $58.5 million and the subscription to fresh shares for $94 million. While this makes the Latin American operations debt free and creates a war chest for growth, it will also release substantial cash investments made by Strides in the working capital needs of the Latin American operations."

The transactions value the Latin American operations of Strides Latina is at over Rs 1,000 crore ($260 million). This will create Strides as a solid regional pharmaceutical company in the Latin American market, he added.

Strides Latina is an operation owned by Strides Arcolab mainly operating in Brazil as Cellofarm and in Mexico as Solara. It has marketing and trading operations in Venezuela as Sumifarma.

Latin American operations were initiated in 2000 and generated sales as on December 31, 2006 of $75 million. For Strides Arcolab's drug development and global marketing of oncology products, Aspen is to partner through a transaction valued at Rs 340 crore ($85 million).

"Here Strides and Aspen will enter into a 50 per cent joint venture to develop, manufacture and commercialise oncology products. This will be achieved by Aspen purchasing 50 per cent of the issued share capital of Powercliff from Strides for $25.75 million and subscribing for 49 per cent of the share capital of Onco Therapies and debt instruments for $16.7 million. Both Powercliff and Onco Therapies are 100 per cent owned by Strides at the time of transactions," explained Arun Kumar.

Powercliff and Onco Therapies have been set up by Strides to house a greenfield oncology business, including manufacturing and research and development operations in India.

Strides on its side is expected to acquire 51 per cent interest in Co-Pharma Limited, Aspen's UK based generics subsidiary for Rs 23 crore (UK pound 2.625 million).

"This will be facilitated by means of the purchase of a portion of Aspen's shareholding in Co-pharma for UK pound 2.25 million and the subscription for new shares for UK pound 375,000. This will enable Strides to enter and achieve a front ended operations in a competitive generic market in the UK for us," said Arun Kumar.

Strides will also acquire 80 per cent of Formula Naturelle Limited, a 100 per cent owned subsidiary of Aspen, for Rs 19.7 crore (Rand 35 million), which will own a basket of nutraceutical products currently marketed by Aspen in South Africa.

"Formula Naturelle fits well in the strides' soft gelatins capsules business in India and has leveraging capability to take this brand global," said Arun Kumar.

Commenting on the deal, Stephen Saad, group CEO Aspen said "We have worked closely with Strides Arcolab since 2003. The close collaboration for the past four years has resulted in Strides becoming a significant manufacturing and development partner to Aspen in both Africa and Australasia."