Strides signs second agreement with Mayne

Plans to increase manufacturing capacity 5 times in 2 years

Bangalore-based Strides Arcolab, a developer and manufacturer of pharmaceuticals, announced here on Wednesday the signing of a second licensing agreement with Mayne Pharma Business Unit, part of the Australia-based Mayne Group.

The agreement will cover the manufacture and development by Strides of a range of six anti-infectives products that will be marketed and distributed in the US and European markets by Mayne.

"This agreement is a follow up of a similar agreement we had announced in December 2004 between the two companies. The previous one also involved six specialised injectable, non-cytotoxic products meant for the US market. The market value of these products is an estimated $350 million. The new products for which the agreement has been signed has an estimated market value of over $1.3 billion," said Arun Kumar, Managing Director, Strides Arcolab.

"A lot of our growth has been happening in pharmaceuticals where we focus on injectables which are mostly distributed through the hospital segment. We are never less than in the third place in the generic injectable segment," said Stuart James, MD and CEO of the Mayne Group. The injectables are expected to start hitting the market in the final quarters of 2006 followed by the bulk of them in 2007.

According to the companies, the agreement's exclusivity will change from product to product and also on the market conditions and competitor positions. The US agreements will remain exclusive.

Though no details on revenue-sharing and expected growth were shared, Kumar said that around $4 million will be invested in specific equipment and enhancement to plants. Strides also plans on increasing its current manufacturing output of half a million units by five times in the next two years.

When asked about the potential they saw in India, James said, "We are involved in discussions with several other Indian companies. The combined factors of low cost and efficient time to market makes India a very important part of our growth process, especially for the US market. We will also be looking to cover aspects of clinical development in the future."

The A$ 3.5 billion company with 14,000 employees and operations in over 50 countries has grown over the past in both the organic route as well as by aggressive acquisitions.

When asked about the possibility of Mayne acquiring Strides, James said, "It is still the early stages of the marriage and we will have to see what children we produce from it."

Strides Arcolab which was formed in 1990 and has 11 manufacturing units globally, employs around 1,300 people. It registered a turnover of $100 million in 18 months ended 2003 and has a market capitalisation of $60 million.

The company recorded revenues of Rs 245.5 crore for the twelve month period-ended September 2004. It plans to announce results within the next few days which would meet previously stated guidance, he added.