Cipla Ltd., through its UK subsidiary, will buy out the stake of a local partner in its Chinese manufacturing unit, Cipla (Jiangsu) Pharmaceuticals Co., the drugmaker announced on Wednesday.
Cipla (EU) Ltd. will acquire the entire 6.9% equity interest of Jiangsu Xidi Pharmaceuticals Co. in the subsidiary for 35 million Chinese yuan, or around Rs 42.6 crore, according to an exchange filing. This will make the Chinese unit a wholly owned step-down subsidiary of Cipla.
Cipla Jiangsu was incorporated in China in Aug. 2019 as a joint venture between Cipla (EU) and Xidi for the purpose of manufacturing, selling, and distributing pharmaceutical products, research and development services, and analytical development services.
Cipla Jiangsu operates a manufacturing facility in China, primarily focused on inhalation response products.
The deal will be subject to compliance with applicable laws and approvals from regulatory authorities in China. The transaction is expected to be completed by Nov. 15, 2024.
The acquisition is being carried out in terms of the existing joint venture contract between Cipla and Xidi and will provide Cipla EU with full control and ownership of Cipla Jiangsu, the company said.
Cipla Jiangsu has a facility located in Qidong of China's Jiangsu province. The Indian pharma major expects to commence supplies to the US market from its China facility in the second half of the current fiscal after getting approval from the American health regulator USFDA, said its Managing Director and Global Chief Executive Officer Umag Vohra.
Shares of Cipla closed 0.4% higher at Rs 1,643.7 apiece on the BSE, ahead of the announcement, compared to a 0.3% advance in the benchmark Sensex.
Twenty-one out of the 37 analysts tracking Cipla have a "buy" rating on the stock, nine recommend a "hold" and seven suggest a "sell", according to Bloomberg data. The average of 12-month analyst price target is Rs 1.630.26, implying a potential downside of 0.8%.
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