Matrix to pick up 60% stake in Chinese firm

Signs revised MoU with MCHEM Pharma Group

Hyderabad-based Matrix Laboratories Limited on Wednesday announced that it has signed a revised memorandum of understanding (MoU) with its Chinese partner MCHEM Pharma (Group) Limited.

The revised MoU will enable Matrix to acquire a 60 per cent stake in the Xiamen-based manufacturer of pharmaceutical products.

While the first MoU, signed on Feb 6, 2005, broadly provided for a joint venture relationship between the two companies, the revised MoU will facilitate Matrix to acquire 60 per cent of the ownership interest in MCHEM Pharma Group and its four other associate companies.

The consideration for the acquisition of the ownership interest will either be in cash or in kind or a combination of both, subject to the detailed due diligence and all the requisite approvals.

The decision to enter into China is part of the overall long-term strategy of Matrix Laboratories to become an end-to-end player and thus integrate both forward and backward.

In line with this strategy, Matrix acquired a finished dosage facility in Nasik in January 2005. Now, this joint venture is an initiative of Matrix Laboratories to backward integrate and further strengthen the supply chain, a press release said.

"Apart from emerging as a fully-integrated and cost-effective pharmaceutical player, the combined strengths of Matrix and MCHEM should provide an opportunity to meet the unmet needs of certain emerging markets including China," said N Prasad, chairman and CEO of Matrix Laboratories.

"We are extremely happy to partner with Matrix Laboratories in its mission to become a major supplier of Active Pharmaceutical Ingredients (APIs) to the global market. MCHEM Pharma Group companies will provide the requisite base for Matrix in China to leverage the advantages that our country offers in this field," said Mark Gao, chairman of MCHEM Pharma Group.