Adcock Ingram in pact for strategic sale of Indian operation

South Africa's second biggest drug marker Adcock Ingram has confirmed it has found a buyer for the Indian marketing and sales operations, but will retain the manufacturing and regulatory capacity of Cosme Farma.
The company spent eight months attempting to sell off the Indian company it had acquired in 2013 for R745 million (about Rs 328 crore) in the hope of taking advantage of the growth in the medicines market in India.
But for the past two years, Adcock Ingram has notched up heavy losses of more than R50 million annually amid a struggle to make inroads in the highly competitive Indian market.

The company announced that it would dispose of its 100 per cent shareholding in Adcock Ingram Healthcare Private Limited, its marketing and selling operation in India, to private equity firm Samara Capital Partners for R336 million.
"The Indian pharmaceutical marketing and selling business does not meet the company's current investment criteria and as a result the company has decided to exit this business," Adcock Ingram said in a statement.
The disposal is subject to approval by the Foreign Investment Promotion Board in India and the separation of the regulatory services business from Adcock Healthcare, the statement added.

The effective date of the disposal is expected to be end July 2016 unless the parties agree otherwise.

The Regulatory Services division, which provides support service in the areas of regulatory services, quality control and assurance, information technology support and research and development services to Adcock, is not included in the disposal and would be separated from Adcock Healthcare.
Analysts said the separation of the businesses was a strategic move which would allow Adcock Ingram to take advantage of cheaper manufacturing costs in India and market products in South Africa.
Adcock Ingram confirmed that due to the pressure on regulatory services in South Africa and a shortage of skills in this area, the Indian regulatory services business remained an important complement to its South African regulatory structure.