The new firm – which has not been named – will have a network of five manufacturing facilities, including the US Food and Drug Administration (FDA) approved plant Strides Shasun is buying from Perrigo.
Strides announced its intention to hive off its ingredient business in August, explaining that a separate leadership team would be better able to ensure the firm complies with regulations covering active pharmaceutical ingredient (API) production.
SeQuent – which is majority-owned by Shasun promoter Arun Kumar – said merging its API business with Strides’ would allow it to become a “pure play” animal health company.
It added that its API business – which is focused on mature small volume molecules - is “sub-scale.”
Sequent added that it “decided to divest the human API business, which though profitable, will require significant CapEx to build scale and capabilities.”
The firms predicted the spin out would be completed in October, subject to shareholder approval.
APIs generated INR7.12bn ($105.6m) for Strides in the fiscal year 2016, roughly flat compared with the year earlier period.
At the time Strides said: “API delivered a steady performance in FY 16 despite impact of incessant rains in the state of Tamil Nadu.”
Sequent has human API production facilities in Mangalore, Mahad and Mysore in India.
According to a Bombay Stock Exchange (BSE) filing, Sequent’s API business brings in INR3bn a year, equivalent to 27% of the company’s annual sales.