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Mitsui confirms increased Arch Pharmalabs investment; wants to build API biz

By Gareth Macdonald , 17-Jan-2013

Mitsui & Co has upped its stake in Indian API maker Arch Pharmalabs in an effort to expand its CMO business.

Japan-based Mitsui announced it had paid former shareholders IL&FS Trust Co, IDBI Trusteeship Services and Rainbow Fund a total of INR3.7bn ($68m) for an additional 27.3 per stake in Arch earlier today, in a move that increased its holding to just under 32 per cent.

Today's announcement confirms various unconfirmed rumours that circulated in the Indian media last September when the Competition Commission of India (CCI) said that an additional investment by Japanese firm - whose diversified offering includes a fine chemicals business - would not breach any of its completion rules.

Tokyo-based Mitsui has held a stake in privately-owed Arch since 2005, when it paid INR 637m for a 5 per cent stake in 2005 in a deal that it become exclusive distributor the CMOs APIs in Japan.

Mitsui cited a desire to expand this part of its business, US and European pharmaceutical industry demand for Asian CMOs as well as the growing global generic market as drivers for the increased investment.

Branded drug manufacturers in Europe and the US are increasingly outsourcing their operations to Asia as a means of reducing development and manufacturing costs and are particularly keen to work with CMOs in India that can offer both price competitiveness and technical capabilities.

Furthermore, as demand for generic drugs grows, there is a pronounced trend among generic drug manufacturers to use CMOs in India, which has a large number of FDA and EDQM approved API plants meeting international standards for the manufacture and quality control of pharmaceuticals.”

Mitsui declined to provide additional details when contacted by in-Pharmatechnologist.com.

Fine chemicals industry consultant Jan Ramakers told in-Pharmatechnologist.com that increasing its presence in the Indian market should serve Mitsui well.

“The Indian pharmaceutical custom synthesis market has been growing quite significantly year on year as a result of demand from both local and foreign companies, and the increased investment will grant Mitsui greater access to this market.” 

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