Irish pharma firm Perrigo looks to sell Indian plant to cut debt
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Mumbai: Ireland-based Perrigo Co. Plc is looking for a buyer for its active pharmaceutical ingredients (API) plant at Ambernath in Maharashtra as part of its efforts to reduce mounting debt, three people close to the development said.
The Ambernath plant, which has a capacity to produce 600,000 tonnes of API per annum, is Perrigo’s only manufacturing unit in India. The US Food and Drug Administration-approved plant’s enterprise value is estimated to be around Rs200 crore, according to one of the people who spoke on condition of anonymity.
The plant has been on the block for the last seven to eight months and number of domestic firms are in talks with the management but no deal has been sealed yet, the person added.
Perrigo acquired 85% in the plant from Vedants Drug & Fine Chemicals Pvt. Ltd for $11.5 million in cash in August 2009. It bought the remaining 15% for $7.2 million in cash in 2014.
“Valuations and limited interest in the industry to expand API capacities could be the possible reasons for the delay in the sale of the asset,” the second person said.
Perrigo hasn’t responded to queries that were emailed on 20 October.
In its annual report for 2015, the consumer healthcare and pharmaceutical firm said its indebtedness could adversely affect its ability to operate. As of June end, Perrigo’s long-term debt stood at $5.65 billion.
“Our API category is subject to increased price competition from other manufacturers of API located mostly in India, China, and Europe. This competition may result in the loss of API clients and/or decreased profitability,” Perrigo said in the annual report.
In the past one year, a couple of multinational pharmaceutical companies have put up their assets in India for sale.
Sandoz, the generic arm of Switzerland-based Novartis AG, is looking to sell its Turbhe plant in Maharashtra as part of its global plans to optimize the manufacturing network. The plant is expected to be closed by December 2016, according to a company announcement.
Last September, Pfizer Ltd sold its Thane plant to Vidhi Research and Development LLP for Rs178 crore.
Among Indian companies, Torrent Pharmaceuticals Ltd acquired Glochem Industries Ltd’s API manufacturing unit at Visakhapatnam in June this year for an undisclosed amount.