Matrix to buy 55% in Concord Bio

The Hyderabad-based Matrix Laboratories has decided to acquire a controlling stake in Concord Biotech, an Ahmedabad-based biotechnology company with fermentation and bio-catalytic technology capabilities and the US FDA-approved active pharmaceutical ingredients (API) manufacturing facilities.

The company signed a term sheet letter of intent (LoI) to this effect today with the promoters of the closely-held Concord Biotech in Hyderabad.

According to the term sheet, Matrix will acquire a 55 per cent stake in Concord Biotech through a combination of purchasing of existing equity shares from the promoters and other shareholders of the company, and subscribing to the new equity shares to be issued by Concord on a preferential basis in two phases.

Concord Biotech's main promoter and managing director Sudhir Vaid and his associates will continue to hold 29 per cent stake in the company. Other existing shareholders will together hold 16 per cent stake.

Under the agreement, Vaid and his team will continue to spearhead the operations of the company under the guidance of the board in which Matrix will have a majority representation.

Concord posted a net profit of Rs 2 crore on a sales turnover of Rs 15 crore for the year 2004-05. The company's present enterprise value is over Rs 100 crore, a Concord Biotech press release said.

Matrix and Concord have agreed to sign a management contract for key personnel of Concord for a period of five years. In addition, Vaid will also enter into a non-compete agreement with Matrix for three years, which will start on completion of the management contract period.

Explaining the rationale behind acquiring a controlling stake in Concord, N Prasad, executive chairman, Matrix Laboratories, said: "Our investment in Concord Biotech is in line with our strategic intention to acquire fermentation technology and manufacturing capabilities. This is a key step in the evolution of Matrix and has come in at a time when the major fermentation-based products are going off-patent in the international markets. This investment will add statins, enzymes and immunosuppressants to our product portfolio and, hence, will widen the range of products we offer to our customers."

The acquisition will add to Matrix's technology and manufacturing strengths. It will be able to fully utilise the market potential of the fermentation technology-based products of Concord by leveraging its strong customer base and marketing strengths in the global generic markets, the release said.

The acquisition is also expected to provide synergistic benefits in terms of providing API support to some of the existing and pipeline products of Docpharma, Belgium "� now fully owned by Matrix "� particularly for lipid lowering and immunosuppressant products.

Concord started its operations in April 2000 by acquiring the manufacturing facility from a Dutch multinational company DSM. Its manufacturing and R&D units are located in Gujarat, at Dholka near Ahmedabad.

Concord, the largest producer of Penicillin-G Amidase enzyme, exports it to a number of firms in China, Europe and the US, besides having a major market share domestically.

It has the largest shake flask capacity in India, wherein wild strains can be manipulated by conventional mutation programmes.

Concord has filed for DMFs (drug master files) for lovastatin, simvastatin and tacrolimus with the US FDA. Dossiers for obtaining CoS (certificate of suitability) for these three products have also been filed with the European Department for Quality Medicines. DMFs for mycophenolate mofetil and pravastatin will be filed in the next quarter.