Samara to buy Adcock’s India unit for $22M

South African drugmaker Adcock Ingram Holdings Ltd said on Wednesday it has signed definitive pacts to sell its India business to private equity firm Samara Capital for Rs 151 crore (about $22 million) in cash.

Adcock Ingram’s India business is housed under Adcock Ingram Healthcare Pvt Ltd. The unit makes and distributes pharmaceutical formulations in India. It also has a back office support services division that is not part of the sale to Samara, the South African company said in a statement.

Adcock said in a statement it is selling the unit as the Indian pharmaceutical marketing and selling business does not meet its current investment criteria.

The sale is subject to approval by the India's Foreign Investment Promotion Board.

The PE firm is investing through its Samara Capital Partners Fund II Ltd. Samara Capital was founded by Sumeet Narang, a former Citigroup India executive, in 2006. The India-focused firm’s portfolio from the healthcare sector includes Mumbai-based medical consumables maker Lotus Surgical Specialities Pvt Ltd and Gurgaon-based Guardian Lifecare.

Adcock had put its loss-making Indian arm on the block in August last year, just three years after acquiring the pharmaceutical brands of privately held Cosme Farma Laboratories Ltd for Rs 480 crore ($86 million).

The Indian arm, which runs Cosme Farma, had net assets of ZAR 701.2 million (Rs 306 crore) and reported a net profit of ZAR 2.1 million (Rs 90 lakh) for the six months ended December 31, 2015.

Adcock had acquired Cosme Farma in July 2012. The all-cash deal involved acquisition of Cosme Farma’s portfolio in areas such as dermatology and gynaecology, besides the marketing assets of the Indian pharma firm.

At the time of the deal, Goa-based Cosme Farma was a mid-sized pharmaceutical business with a sales force of about 1,000 and providing coverage to 150,000 physicians. It had distribution capabilities in 27 states across categories like gynaecology, gastro-intestinal, dermatology and orthopaedic. The firm was owned by Cosme Menezes.

Adcock also had a manufacturing presence in India since 2007 through a joint venture with its Bangalore-based outsourcing partner Medreich Ltd, which was acquired by Japan's Meiji in 2014.

Adcock is present in both pharmaceutical and hospital products businesses with 10 per cent share of the private pharmaceutical industry in South Africa.

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