Genepharm to enter Asian generics market through strategic partnerships

Melbourne-based Genepharm Australia has entered into a heads of agreement accord under which it will acquire the Indian drugmaker Strides Arcolab's Australian and Asian business for around A$65.0 million ($59.1 million), which will consist of ordinary shares in the former issued to the latter at a price of A$0.60 each. As a result, Strides could end up with around 55% of the expanded capital base of Genepharm, compared with its current stake of some 19.8% in the Australian firm.

Strides businesses in Australia and Asia are involved in the manufacture and distribution of generic prescription pharmaceuticals and over-the-counter medicines across the region, with sales in a number of countries, including Singapore, Malaysia, Thailand, Vietnam, Hong Kong and Australia. For the year ending June 30, 2008, these businesses are forecast to generate revenues of A$32.5 million and earnings before interest, tax, depreciation and amortization of A$7.4 million. The main sales arm of the Strides Asian operations is Drug Houses of Australia (Asia) Pte, which is the leading local generics firm in Singapore and will become the hub for Genepharm's Asian business, managing its various operations and distribution partnerships across key markets.

Along with the completion of the proposed deal, Genepharm will enter into a five-year preferred supply agreement, under which, subject to any existing Strides supply arrangements in the region, it will have the first right of refusal to distribute all the Indian firm's existing and future products (other than for the treatment of AIDS, tuberculosis and malaria) into Australia, New Zealand and the Asian regions, excluding Japan and China, where Genepharm will have non-exclusive rights.