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India's Kemwell takes away Pfizer's plant

By Gregory Roumeliotis , 15-Mar-2006

In its first venture outside the subcontinent, though certainly not the last of its kind for India pharma companies, contract pharmaceuticals manufacturer Kemwell has bought for an undisclosed sum Pfizer's production plant in Uppsala, looking to expand its services in Europe.

Kemwell follows in the footsteps of several Indian drug firms that have looked to capitalise on strong domestic growth by acquiring assets in Europe, including Dr. Reddy's Laboratories, which bought German generic drug maker Betapharm last month in the biggest deal yet seen in this shopping spree worth up to €480m, and Matrix, which paid €217m last June for a 22 per cent controlling stake in Belgium's Docpharma.

The Swedish manufacturing plant will continue to make Salazopyrin, an anti-inflammatory drug for Crohn's disease and ulcerative colitis, offering a convenient solution for Pfizer which will outsource the production of its drug without shutting the facility down - the factory's 170 workers will be added to Kemwell's existing workforce.

 

In addition, apart from the €37.5m Kemwell expects the plant to add to its annual turnover, the Uppsala unit is approved by the US Food and Drug Aministration (FDA), the European Medicines Agency (EMEA) and Japan's regulatory authority, allowing it to target their respective markets.

 

Except from Pfizer, Kemwell's clients include five of the top ten pharma companies in the world, including AstraZeneca and GlaxoSmithKline, and the firm manufactures five of the top ten pharma brands in India.

 

The Indian company says it succeeded in clinching the deal partly because of its commitment to establish itself in Europe, expressing its confidence that more contracts there will soon follow as a result.

 

"This transaction builds on Kemwell's extensive experience in contract manufacturing and demonstrates our commitment to strengthen and broaden the pharmaceutical business through strategic global acquisitions," commented Subhash Bagaria, Kemwell's managing director.

 

The divested plant, which can manufacture active pharmaceutical ingredients (APIs) as well as finished drugs, was one of four manufacturing units that Pfizer has in Sweden, with the one in Stockholm due to be sold by 2008.

 

"By selling production but maintaining our rights to the product we have expressed our confidence that production will remain in Boländerna," said Zeibrant Lindqvist, chief executive of Pfizer Health AB.

 

Following the agreement, Kemwell reaffirmed its pledge that no branded products of its own will be launched in the market to avoid conflict of interests with customers.

 

By becoming the first Indian contract manufacturer to acquire business abroad, the company now hopes to generate new business by increasing not just its capacity, but its geographic proximity to big pharma as well.

 

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