South Africa: Aspen Sells Its Share in Matrix
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Business Day (Johannesburg)
10 October 2008
Posted to the web 10 October 2008
Tamar Kahn
Cape Town
Generic drug maker Aspen Pharmacare has moved to increase control of its supply chain, dissolving two joint ventures formed in 2005 with India-based Matrix Laboratories for the production of active pharmaceutical ingredients.
The development sees Aspen take full control of Cape Town-based Fine Chemicals Corporation by buying back 50% of the company's shares from Matrix Laboratories. It originally sold the stake for $20m. Aspen will also sell its 50% stake in its Indian joint venture to Matrix. Aspen paid $36m for it in 2005.
Aspen yesterday declined to provide full details of the latest transactions, saying only that it had made a net profit of $16m.
Fine Chemicals makes highly specialised niche molecules, such as those used for making cancer treatments, while Astrix focuses on producing the ingredients used for making AIDS drugs. It has supplied Aspen and other major generic drug manufacturers such as Cipla and Ranbaxy.
Aspen CEO Stephen Saad said it would retain a shareholding in Astrix through a B share.
"Aspen has retained all of the commercial rights and strategic advantages it previously enjoyed through Astrix, including priority of supply and maintenance of existing transfer pricing philosophies for (AIDS drugs), in both the revised shareholders' agreement and various long-term supply agreements," he said. "We didn't want to lose the strategic advantage of ownership but we are not (in the business) of selling active pharmaceutical ingredients to other players."
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The agreements are subject to regulatory approval.
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