Johannesburg South Africa, and Bangalore, India: Aspen Pharmacare (Aspen), Africa’s largest pharmaceutical manufacturer and the largest generics manufacturer in the southern hemisphere, has entered into a series of transactions with Bangalore-based Strides Arcolab Limited (Strides), one of India’s largest exporters of pharmaceutical products.
Arun Kumar, Strides’ Vice Chairman and Managing Director said “we are delighted to enhance the already rewarding partnership with Aspen and to broaden the strategic relationship into a global partnership through the four transactions being announced today.
Aspen has been Strides’ first key partner and I am particularly delighted that the partnership has grown, based on strong fundamentals of capability and trust.
It has always been a delight working with Aspen and with this new alliance, and I am extremely confident that we will create significant new value for both companies. Having worked with Stephen Saad, Gus Attridge, Aspen’s Deputy Group CE and their management team, this strategic conclusion will be ground breaking in many respects and I look forward to working closely with them to create a solid regional Pharma company in Latin America. The opportunity to create a leading oncolytics operation in a niche and difficult domain, bodes well for the Oncolytics JV.
Stephen Saad, Aspen Group Chief Executive said “we have worked closely with Strides since 2003. The close collaboration of the past 4 years has resulted in Strides becoming a significant manufacturing and development partner to Aspen in both Africa and Australasia.
Today, I am happy to announce that we will forge an even closer partnership. This partnership will be extended to Latin America, Global Oncolytics, Co-pharma in the UK, and Nutraceuticals in South Africa.
It has always been a part of the Aspen strategy to enter the Latin American pharmaceutical market. However, until now, we had been unable to find a platform company through which to enter these markets. We were fortunate enough that, through Strides, we have a partner who has had experience and success in this market. Cellofarm is the number two player in the Brazilian hospital market. Furthermore, it has sufficient presence to begin the process of leveraging Aspen’s extensive product portfolio into these markets. The addition of Aspen’s existing intellectual property (IP), Aspen’s front end marketing capabilities, and the combined pipelines of Strides will give impetus to Cellofarm in these branded generic markets. These markets are challenging and have high barriers to entry and, given this launch pad, they should prove key markets into the future for leveraging the significant IP that already vests with Aspen, as well as roll-out of the local manufacturing facilities.
Strides and Aspen have a shared vision regarding sterile manufacture and the extension to Oncolytics will complete the basket to the existing capabilities that we are developing around hormonal and other sterile capabilities.
We are excited by the opportunity these initiatives offer our organisations. I would also like to thank Arun Kumar, the Vice Chairman and Managing Director of Strides and his team for their efforts in achieving the above. Aspen has been privileged to have enjoyed this close partnership with Strides and from this we have drawn much confidence as we take this partnership to the next level.
These investments in Latin America and Oncolytics are important strategic steps in the internationalisation of Aspen which I expect should be value enhancing for Aspen’s shareholders in the medium term.
Furthermore, we have sold a majority share in Co-pharma and our South African Nutraceuticals business. We believe the Strides business model is better suited to creating value in these businesses.”
The completion of the transactions is subject to the signing of legal agreements and is subject to the Exchange Control approval of the South African Reserve Bank and the approval of the Reserve Bank of India and Strides’ bankers and other financial institutions, as appropriate.
Shauneen Beukes, Shauneen Beukes Communications
Tel: +27 12 661 8467 : Cell: 082 389 8900
Fax: +27 088 12 661 8467
On Behalf Of:
Stephen Saad, Aspen Group CE
Tel: +27 31 580-8602
Fax: +27 31 580 8640
Gus Attridge, Aspen Deputy Group CE
Tel: +27 31 5808604
Fax: +27 31 580 8640
Arun Kumar, Strides Vice Chairman & MD or
Ravi Seth, Strides Group CFO
Tel: +91 80 6658 0110
Fax: +91 80 6658 0200
Harini Iyengar, Adafctors PR, Bangalore
Tel: +91 80 4113 32062/64
Fax: +91 80 4113 3059
Details of each of the transactions outlined above are as follows:
Strides Latina currently comprises two operations namely Cellofarm in Brazil, and Solara in Mexico. In addition to these two companies, a further two trading operations, Sumifarma and Mexicana, are in the process of being established in Venezuela and Mexico respectively. Cellofarm and Solara were formed in the early 2000’s and they both sell a range of generic products in a number of therapeutic areas, with a particular focus on sterile products in the hospital market. The products are either imported from Strides’ manufacturing facilities in India or are manufactured locally. Revenues for the year ended 31 December 2006 for Cellofarm and Solara were US$69 million and US$6 million respectively. Both Cellofarm and Solara have solid dosage manufacturing facilities locally and Cellofarm is in the process of completing the construction of a sterile manufacturing facility in Brazil.
Powercliff and Onco
These two companies have been established by Strides to house a greenfield generic oncology business, including the manufacturing and research and development operations located at a production facility in India which is nearing completion and which, prior to this transaction taking place, will be owned by Onco. An intellectual property pipeline relating to this business has already been identified by Strides and the rights to 32 oncology products in development will be acquired by Powercliff prior to the completion of this transaction. As such, the operations will focus on the manufacture and commercialisation of these initial products and the development of further products.
Co-pharma sells a range of commodity generic products in the United Kingdom. Turnover for the year ended 30 June 2007 amounted to GBP10.4 million.
Formule Naturelle (Pty) Ltd – Nutraceutical Products
Aspen Pharmacare currently markets a range of nutraceutical and health products in South Africa, under brands such as Formule Naturelle, with the majority of sales being through pharmacies and major retail chains. Revenue generated by these products in the year ended 30 June 2007 was R40 million.
Aspen has had a development and manufacturing relationship with Strides for a number of years and discussions revealed an opportunity for the two parties to form an alliance that would benefit from Strides’ strong development and manufacturing capabilities and Aspen’s proven marketing track record. All of the transactions will endeavour to realise the synergy provided by the relative strengths of Aspen and Strides.
Two key areas that Aspen has identified for its future growth are:
Aspen has been seeking a business partner able to extract the potential offered by Co-pharma’s distribution capabilities in the United Kingdom. Strides’ strengths in development and low cost, flexible manufacture will provide Co-pharma with an improved product offering.
Aspen has taken the strategic decision to reduce its personal care and natural products range within its Consumer Division by way of selective disposals. The hiving-off of the nutraceuticals products is consistent with this objective. Strides has significant manufacturing capabilities for soft gel products which comprise a material portion of the nutraceutical range.