Japanese firm Mitsui & Co Limited buys stake in Arch Pharmalabs Limited

Mitsui & Co Ltd has acquired a 5 per cent stake in Arch Pharmalabs Ltd for about Rs 65 crore. The Japanese firm has bought the stake in the Indian active pharmaceutical ingredient manufacturer, a deal which values the Indian firm at Rs 1,300 crore. The Japanese firm’s investment will be in fresh equity issued by Arch Pharmalabs Ltd.

Arch Pharmalabs stands to gain from the opportunity as the Japanese firm will establish a liaison between drug inventors in Japan and the firm. In return, the Indian firm would then make the active ingredients developed by the two firms or intermediaries that can be used to hold the drug to make tablets or capsules. The Japanese firm said it had agreed on a deal with Indian firm for the acquisition of newly subscribed shares of around 5 per cent, for around US$13 million.

The agreement with Arch makes Mitsui one of the first Japanese conglomerates to take a stake in an Indian Contract Manufacturing Organization (CMO) in the industry. Arch is a chemical intermediate and API manufacturer in India with a head office in Mumbai and factories across the country.

Arch has a diverse range of technology and is currently supplying its products to numerous leading multinational pharmaceutical companies based in the US, Europe and the Middle East, for drugs related to hypertension, hyperlipidemia, antibiotics and cancer amongst others.

Mitsui, with over 40 years of experience of business in this field, has been a solution provider to pharmaceutical companies with services ranging from supplying raw materials, chemical intermediates and APIs to supporting management of manufacturing as well as providing logistics service to pharmaceutical companies.

Through this investment, Mitsui intends to strengthen the CMO business platform. This investment illustrates Mitsui's recognition of India as having a huge potential for manufacturing pharmaceutical chemical intermediates and APIs and the growing market demand in the Asia Pacific region.

Mitsui, through this investment into Arch, is keen on taking a further role towards contributing to the industry by supplying key raw materials both in the Asia Pacific region and the world. The firm intends to strengthen the contract manufacturing organization business platform.

Further, this investment indicates Mitsui's recognition of India as having a huge potential for manufacturing pharmaceutical chemical intermediates and APIs and the growing market demand in the Asia Pacific region. Arch Pharma is also looking at an initial public offer (IPO) early next year as a route for some of its existing private equity investors to partly cash out.

24 Sep 2010.