Ranbaxy Laboratories Ltd has exited its joint venture (JV) in China by selling its 83 per cent stake in Ranbaxy (Guangzhou China) Ltd (RGCL).
A Chinese drug intermediate maker — HNG Chembio Pharmacy Co Ltd (HNG) — had purchased the Ranbaxy stake for an undisclosed sum, the company said.
RGCL, set up jointly by Ranbaxy, Guangzhou Baiyunshan Pharmaceutical Company Ltd, Guangzhou, China and Hong Kong New Chemic, Hong Kong in 1993, had registered sales of $20 million (Rs 80 crore) in 2008.
Ranbaxy had invested $5.3 million as capital contribution in the JV.
The stake sale, second in December for Ranbaxy, was part of its endeavour to develop a new business model for China, a Ranbaxy spokesperson said. On December 8, the company had announced its exit from a Japanese JV ‘Nihon Pharmaceutical Industry Co Ltd’ (NPI) by selling its entire stake to its JV partner Nippon Chemiphar.
The company’s re-orientation towards its existing JVs began after Japanese drug major Daiichi Sankyo acquired 63 per cent stake in Ranbaxy. The company spokesperson said the stake sale does not signal an exit from China. “China continues to be an important market for Ranbaxy and the company believes that this new approach will create greater value,” he said.
Ranbaxy says it will source value-added pharmaceutical formulations from outside China thereby consolidating its manufacturing operations for cost synergies.
RGCL sales last year grew 17 per cent (as compared with 2007 sales) on the strength of a 32 per cent growth registered by its cardiovascular medicine Simcor (brandname of simvastatin and antibiotic brands such as Bacqure, Cifran and Keflor.
Industry experts say the development will not have much impact on the profitability of Ranbaxy. “This is part of the restructuring process that is going on. The company had mentioned that it will be exiting non-profitable geographies. To that extent it is a positive development,” Sarabjit Kaur Nagra, Vice President, Research, Angel Broking, said.
Daiichi Sankyo has three subsidiaries in China – Daiichi Sankyo Hong Kong Ltd, Daiichi Sankyo Pharmaceutical (Shanghai) Co Ltd and Daiichi Sankyo Pharmaceutical (Beijing) Co Ltd.
