Cipla announces investment worth $65 million (Rs.300 crore) to acquire stakes in MabPharm & BioMab


Cipla announced an investment of $65 million, about Rs 300 crore, for the acquisition of stakes in 2 (Indian and Chinese) Biotechnology companies on Tuesday. With the investment in the two biotech companies, Cipla joins the rank of Indian rivals such as Wockhardt and Biocon in a bid to gain from the $90 billion global biogenerics market.

 

The company will buy a 40% stake in MabPharm, an Indian biotech company for an estimated investment sum of $40 million. The biotech company is currently in the construction of a world class facility for biogenerics products in Goa. In the investment deal, Cipla will retain the rights to market all MabPharm’s biogenerics products both in the Indian and the International market.

 

The other investment entails buying a 25% stake in BioMab, a Hong Kong based biotech firm, for an investment worth $25 million, to be made through a wholly-owned overseas subsidiary. Cipla will as well have the rights for marketing the Hong Kong Company’s biogenerics products in the city and overseas.

 

According to YK Hamied, Cipla chairman, the investments in India and China would be funded through internal accruals, adding that, with an overall biotech opportunity of $80-$90 billion globally, the company would still benefit considerably if it got a share of this portion, however small it may be. Indian biopharmaceutical firms have over time employed advanced capabilities in biogenerics market and are present in virtually all the biologics going off-parent.

 

According to an Ernst & Young report, Indian pharmaceutical companies such as Reliance Life Sciences, Biocon, Wockhardt, Shantha Biotech, Panacea Biotech and Intas Pharmaceuticals are companies with strong capabilities. With the introduction of the product patent bill in India, opportunities in the pharma space are getting limited, but because Intellectual Property Rights do not hold in biotech, this offers a great opportunity, added Hamied.

 

Additionally, he said Cipla was getting some proposals from conglomerates for equitable partnerships, noting that no agreement had been concluded thus far. Recently, the biopharma space in India has been robust; the year 2009 witnessed the biggest acquisition investment when the French pharmaceuticals giant, Sanofi-aventis purchased Indian vaccine manufacturer, Shantha Biotechnics for an investment worth $660 million.

 

Bangalore Genei, a small proteomic and genomic research firm, was also bought by Merck KgaA for around $8.8 million. The new agreement buyout by Cipla marks the second by the company within a month. In May, it had announced the acquisition of two facilities, which were making formulation and bulk drugs exclusively for Cipla, for Rs. 82.02 crore.

 

June 17, 2010.