Strides to use licensing income, loan for buyouts

Strides to use licensing income, loan for buyouts

Mumbai: Strides Arcolab Ltd plans to utilise an estimated $100 million from licensing income to partly fund its two buyouts from South Africa’s Aspen Pharmacare next fiscal, its top official said on Friday.

The Aspen deals enable Strides to license existing and future oncology products to Aspen for distribution in certain territories and draw lcensing fees.

“We will deploy the expected licensing income in the year 2010 to discharge our considerations from Aspen deals," Group chief financial officer T.S. Rangan told Reuters over phone.

The company on Thursday said, it would increase stake up to 100% in oncology joint ventures with Aspen for $117 million.

In February, the company had announced Aspen’s Brazilian facility buyout for about $75 million.

“In case of any shortfall, we will go for a bridge loan," he added, saying the debt component would be very less.

“The acquisitions are in line with our strategy to consolidate position in sterile business," he said.

“The deals strengthen our focus in speciality verticals."

Post Aspen deals, Strides group revenue for FY10 is expected to grow by 30-35% to Rs17.75-18.25 billion, it said in a statement on Thursday.

“We continue to talk with big pharma companies (abroad) and if there is an opportunity, we will definitely take it up," he added, referring to the company’s strategic tie-ups with Pfizer Inc and GlaxoSmithKline Plc.

The company has not planned any major capital expenditure during next financial year, he stated.

“We have already spent some Rs175 crore on oncology operations in addition to Rs350 crore on sterile (operations)," he added.

Strides Arcolab’s proposed stake hike in Australia’s Ascent Pharmahealth Ltd would be funded locally by the company, Rangan said.

Strides had said on Tuesday, it was in discussions to increase its stake in Australia’s Ascent Pharmahealth to 100% from present 57%.

To begin with, Strides wants to buy further 13-15% stake at a cost of $10 million-$15 million, Rangan said.

“For a complete buyout, we might have to shell out some $35 million."