DRL buys Roche unit for $59 mn

Mexican arm comes with staff, supply contracts.

Dr Reddy's Laboratories Ltd is acquiring Roche's API (active pharmaceutical ingredients) business at a state-of-art manufacturing site in Cuernavaca, Mexico, in a $59-million deal, including working capital and supply contracts. The deal also includes taking on board all Roche employees.

This business involves the manufacture and sale of APIs, including intermediates to Roche and other innovators. The facility has about 18 products, including mature APIs and a range of intermediates and steroids.

This acquisition also adds unique steroid manufacturing capabilities to Dr Reddy's profile. The Cuernavaca site currently employs nearly 340 people and has been inspected by the US FDA and other international regulatory agencies.

The acquisition is expected to be completed by the end of December 2005. The company expects the acquisition to be EPS accretive to Dr Reddy's and the full financial impact of the acquisition will be realised from 2006-07 onwards.

With this acquisition, "Dr Reddy's will emerge as a leading player in the custom pharmaceutical services (CPS) business and will position itself as a partner of choice for innovator companies across the globe with service offerings spanning the entire value chain of pharmaceutical services," GV Prasad, chief executive officer of Dr Reddy's Laboratories, stated in a press release today.

Prasad said the strategic acquisition would also provide an opportunity for Dr Reddy's CPS business to grow from the current base of $10 million to $100 million over the next 18 months. It would lay a strong foundation to drive the next wave of growth in the company's CPS business, he added.

Headquartered in Basel, Switzerland, Roche is one of the world's leading research-focused health care groups in pharmaceuticals and diagnostics.