Marksans presses on with plan to exit API business
pharmafile | January 11, 2010 | News story | Manufacturing and Production, Research and Development |Â Â API, MarksansÂ
India’s Marksans Pharma is seeking approval from its shareholders to divest or lease out its two active pharmaceutical ingredient (API) manufacturing facilities as a continuation of its plan to focus on selling finished formulations.
In a filing to the Bombay Stock Exchange, Marksans said it plans to “sell, lease or dispose of” its plant in Pune, following earlier statements that it intends to completely hive off the API division, focusing instead on pharmaceutical products and providing contract research and manufacturing services (CRAMS).
The results of the postal ballot will be revealed early in February.
Marksans has been trying to boost its international presence for finished dosage forms and develop a position in generic biological drugs, and now sees the API business as dilutive to the overall business.
In 2008, Marksans boosted its formulations business with the purchase of two UK companies, over-the-counter (OTC) drugmaker Bell, Sons and Co and generics manufacturer Relonchem, which helped push fiscal 2008-09 sales up to around $80 million. Since then APIs have progressively taken a smaller share of the company’s overall turnover.
Marksans has two API manufacturing facilities in Pune with a combined a manufacturing capacity of 1,600 tonnes per annum and makes quinolones, ranitidine and various other actives.
The company is the second-largest manufacturer of ciprofloxacin and ranitidine in India, but said that “severe pricing pressure, cut-throat competition and dumping from China” has held back the performance of the API division.
There is overcapacity for APIs in the Indian marketplace, it maintains, while export sales have also suffered from sluggish demand.
The money raised by the divestment will be used to pay off debts, Marksans said, noting that $50 million is scheduled for payment on November 9, 2010.
The company previously received shareholders’ blessing for a plan to raise up to $125 million by issuing equity or bonds, but had not proceeded in recent months because of the adverse financial environment. It will seek a fresh approval for this plan in the latest postal ballot.
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