Strides, Aspen ink four JVs to strengthen niche arms

BANGALORE: It is raining deals at Bangalore-based mid-sized pharma player Strides Arcolab. In a bouquet of four deals, Strides Arcolab and South Africa’s largest pharma generics player Aspen have spun a web of JVs and acquisitions to unlock the values of their niche subsidiaries.

Strides has bought out 51% stake in Co-pharma, the subsidiary of South Africa’s largest pharma player Aspen, to gain a grip in the competitive UK generics space, for Rs 23 crore. The Bangalore-based Rs 760-crore Strides has also picked up 80% of Formule Naturelle, a dormant subsidiary of Aspen, for Rs 19.7 crore to gain a hold in the nutraceutical market.

The assortment of deals will infuse Rs 300 crore (net of acquisitions) into Strides even as it consolidates its presence in oncology, nutraceuticals and gains a leg-up in the UK generics space. Strides may use these funds to reduce its debt, according to a company statement.

Strides has also managed to build its Latin American subsidiary to a size where it is valued at Rs 1,000 crore. Aspen will acquire 50% stake in Strides’ Latin America subsidiary and use it as a vehicle to consolidate its presence in the region. Aspen will acquire shares from Strides subsidiary for $58.5 million and subscribe to fresh issue for $94 million. Strides Latina, which was set up in 2000, generated sales of $75 million in 2006.

Both pharma companies have also forged ties to deep dive into the oncology space. Strides and Aspen will set up a 50% joint venture to develop, manufacture and commercialise oncology products. Strides’ oncology products block in Bangalore will go on stream by the first half of 2008. The joint venture will be given shape with Aspen buying 50% of Powercliff for $25.75 million while subscribing to 49% of the share capital of Onco and debt instruments for $16.7 million. Powercliff and Onco are 100% subsidiaries of Strides.

Commenting on the deals, Strides vice-chairman and group CEO Arun Kumar said: “Strides has always believed in a partnership model. The deals aim to help Strides gain regional leadership and create value partnership models with key global pharmaceutical companies.” Says Stephen Saad, Group CEO, Aspen: “This partnership will be extended to Latin America, global oncolytics, Co-pharma in the UK, and nutraceuticals in South Africa.”

Strides’ strengths are in manufacture of sterile injectibles and softgel capsules and with these deals, its oncology domain will gain traction. On the BSE, Strides scrip gained 9.63% to close at Rs 290.90. Strides has forged these deals with Aspen which also has two joint ventures with Hyderabad-based Matrix, which is now under the fold of Mylan Labs. Interestingly, two years back, Strides and Matrix had actively considered a merger proposal only to abort it later.