Dishman to buy Solvay fine chemicals unit

By Emilie Reymond

- Last updated on GMT

Indian contract manufacturing organisation (CMO) Dishman
Pharmaceuticals has announced its plans to buy Solvay
Pharmaceuticals' fine chemicals and vitamin businesses for an
undisclosed sum.

Under the terms of the deal, Dishman will buy the Belgian firm's facilities in Veenendal, Netherlands, as well as the intellectual property rights for fine chemicals, vitamin D and vitamin D analogues business, the company said.

Dishman said it would retain the manufacturing of cholesterol and vitamin D analogues at Veenendaal and transfer the vitamin D3 production to its Indian facilities.

For the Indian firm, the acquisition is an opportunity to bring fine chemical expertise to India, while for Solvay the intended sale of the two units is a result of the firm's strategy to focus on the main therapeutic areas of cardio-metabolic and neuroscience treatments and hive off the non-core business.

VVS Murthy, Dishman's chief financial officer, told Outsourcing-Pharma that the deal was "much smaller" than the acquisition of Solutia's services business last year worth $74.5m (€54.7m).

In addition, he said, it will not change the existing relationship between the two companies.

Indeed, Dishman has a long-term relationship with Solvay for contract manufacturing of a patented active pharmaceutical ingredient (API) and its intermediates.

Dishman currently supplies the API for Eprosartan Mesylate (EM) - a hypertensive drug marketed by Solvay under the brand Teveten - and its intermediates, and the contract goes on until December 2008 and is extendable annually thereafter.

"Solvay's patent for EM expires in 2013 so we expect for our contract to be renewed until then," said Murthy.

Furthermore, the Indian firm used to have another manufacturing contract with Solvay which started in 2002 for the production of another intermediate 7-dehydrocholesterol (7-DHC) but the deal was not renewed.

"We will be able to resume production of 7-DHC intermediates with the facility we will gain from the acquisition," said Murthy.

In total, Solvay sources over half of its outsourcing requirement from Dishman alone, which represents a third of the India-based company.

The transaction is expected to be completed in four months, Murthy added.

The contract manufacturing market in India is worth about $500m and has an annual growth rate of 25 per cent.

There are around 150 dedicated contract manufacturing units in India that are contributing to 60 per cent of total contract manufacturing business, according to analysts.

India is emerging as a competitive outsourcing hub and is playing a major role in the global pharmaceutical industry in manufacturing APIs and intermediates for drug makers.

As a result, the global pharma majors are establishing long term relationships with Indian pharma companies such as Dishman.

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