Matrix, S African firm to form two joint ventures

Alliance to strengthen businesses in India, South Africa

Hyderabad-based Matrix Laboratories Limited and Aspen Pharmacare Holdings Limited, South Africa, have decided to form joint ventures (JVs) in India and South Africa.

This is a strategic alliance between both the companies for further strengthening their respective businesses in the two countries.

As part of this alliance, both the companies have signed two MoUs to enable them to hold cross-country ownership in two pharmaceutical manufacturing units through a joint venture route, according to a company press release.

Aspen Pharmacare is Africa's largest pharmaceutical manufacturer and a major supplier of branded and generic pharmaceutical products to the southern African and selected international markets. Aspen group's total turnover for the year ended June 2004 was $321 million with a net profit of $52 million.

As per the first MoU, Matrix and Aspen will form a 50:50 JV in India, which shall manufacture active pharmaceutical ingredients (APIs) required by Aspen.

Matrix would licence the product technology relating to several APIs to the JV company on a non-exclusive basis. Aspen will uplift its requirements of these APIs from the JV company.

As per the second MoU, Matrix will pick up a 50 per cent stake in Fine Chemicals Corporation (FCC), South Africa, which is, at present, wholly-owned by Aspen.

FCC has an API manufacturing facility in Cape Town and also has US FDA-approved manufacturing facilities. It has filed 25 Drug Master Files (DMFs).

FCC has expertise in handling oncology, controlled substances and high potency APIs. There is no overlap between the products of FCC and Matrix, the press release said.

"Our alliance with Aspen Pharmacare is very significant and will go a long way in further strengthening our overall API business. In addition, this alliance will also give Matrix a strategic presence in South Africa," said N Prasad, chairman and chief executive officer of Matrix.

"Our alliance with Matrix will be a major milestone in our effort to secure strong supply source for APIs for some of our key products. Matrix would also provide strategic inputs in running the business of FCC," said Stephen Saad, chief executive officer of Aspen Pharmacare.

The contemplated transactions remain subject to conclusion to definitive agreements, the performance of due diligence investigations and the obtaining of necessary approvals from the boards of directors of Aspen and Matrix, the South African Reserve Bank and the RBI.