Cipla, the largest domestic drug maker, today said it would invest $65 million (over Rs 300 crore) in three years to acquire a 40 per cent stake in an Indian biotech company and 25 per cent stake in a similar company in Hong Kong, as part of its foray into biosimilars or generics of off-patent biotech drugs.
The company board today approved the acquisitions through subscription of fresh shares in both companies. While the Indian biotech company is setting up a facility for biosimilar products in Goa, the Hong Kong-based company is setting up a biotech plant at Shanghai in China, through a wholly-owned subsidiary. Cipla will have rights to market biosimilar products of the companies in India and international markets. Cipla did not disclose the names of the companies.
Industry sources said Cipla’s move stems from its failure to develop a portfolio of biosimilars. Cipla officials could not be contacted.
About 10-15 per cent of the global pharmaceutical market consists of drugs of biotech origin and many of them are expected to go off-patent in the coming years. The combined market for biosimilars, also known as follow-on biologics, is expected to touch $21 billion by 2015 in the US and Europe. Further, about 30 per cent of the new drug approvals by the drug regulatory authorities of the US and Europe in the last few years are of biotech origin.
Indian companies — including Ranbaxy Laboratories, Dr Reddy’s Laboratories, Reliance Life Sciences, Intas Pharmaceuticals, Wockhardt and Biocon — are developing a large portfolio of biotech drugs.
Six years ago, Cipla had formed a 50:50 joint venture (JV) — Avesta Biotherapeutics and Research (ABRPL) —between its group company Meditab Specialties and Bangalore-based Avestha Gengraine Technologies (Avesthagen) to develop about a dozen biosimilar drugs, mainly cancer and heart.
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The JV partners had plans to invest over Rs 600 crore to create manufacturing facilities at Bangalore and Hyderabad to manufacture these drugs, Villoo Morawala Patell, chairman and managing director of Avesthagen had told Business Standard two years ago.
However, the joint venture failed to meet its research targets and Cipla is now forced to look at alternate options, according to sources.
Last September, a Cipla official had said the company was in talks for a 50:50 joint venture with an established Chinese biotech company, with products in the local market. Cipla has recommended a dividend of Rs 2.00 per share for 2009-10.
Cipla net up 40%
Drug-maker Cipla today reported a 40.41 per cent rise in consolidated net profit to Rs 1,082.59 crore for the year ended March, compared to Rs 771.02 crore in the previous financial year.
The company has recommended a dividend of Rs 2 per share of Rs 2 face value for the year 2009-10, which will entail an outgo of Rs 160.58 crore.