Schein To Acquire 18% Cheminor Stake

Schein Pharmaceuticals Inc, the generics arm of German multinational Bayer AG, will acquire an 18 per cent stake in Cheminor Drugs, the Hyderabad-based, Rs 133.8-crore pharmaceutical company that is a part of the Dr Reddys Laboratories group.

Schein will also acquire the marketing rights for some Cheminor formulations. The total cost of the share acquisition is estimated at Rs 54 crore.

The Cheminor board met recently to decide on the allotment of shares in this regard. Schein Pharmaceuticals will receive three million shares of Rs 10 each at a premium of Rs 170 per share. Schein will make available $10 million by December and the balance $5 million by June next, company sources said.

 

After the preferential allotment, Cheminors equity will increase from Rs 13.63 crore to Rs 16.63 crore. The promoters will hold 53.71 per cent, while Schein Pharmaceuticals will hold 18.04 per cent and remaining 28.25 per cent will be held by others.

Cheminor Drugs is giving the US company marketing rights for some of their formulations to be manufactured at their new formulations plant in Hyderabad. The marketing arrangements will be effective from next financial year.

Analysts say that Scheins investment in Cheminor is only to show their commitment to their Indian partner and that the main benefit to both companies will come from marketing of generic (off patent) formulations in US.

This alliance will give Cheminor access to the distribution network of Schein, which is the worlds fifth largest generics company. Getting to the market first is the crucial factor in marketing of generics, says Sapna Malhotra, research analyst at SSKI.