SMS Pharmaceuticals has sold its manufacturing units in Visakhapatnam to generic and specialty pharmaceuticals maker Mylan Laboratories for Rs 173 crore ($33 million), said the company in a filing. The unit is involved in manufacturing bulk drugs and formulations in the oncology segment.
The deal would be the second acquisition of the US-based generics maker after it acquired 71.5 per cent stake in Matrix Laboratories, one of the world's largest suppliers of active pharmaceutical ingredients (API), in 2006 for $736 million. The deal was one of the first major inbound acquisition in the pharmaceutical space by global majors.
The shares of SMS Pharma were up by 3.61 per cent to Rs 208 on Wednesday morning on the Bombay Stock Exchange. This gives the company a market capitalisation of Rs 208 crore.
SMS Pharma is focused on API manufacturing and claims to be the single largest producer of anti-ulcer products. The firm has also expanded into CRAMS and set up an oncology API and formulations manufacturing facility.
The Visakhapatnam facility, which is being sold to Mylan, is yet to get approval from the USFDA. SMS Pharma said that the sale will not have much impact on its revenues and "will create a path for strategic alliances with the multinational as well as business development by way of getting multiple products."
The funds from sale will help SMS Pharma strengthen its existing facilities, cut interest costs and overheads besides improving working capital. The Hyderabad-based firm has slipped into losses over the last few quarters owing to the interest costs.
The company reported a 6 per cent fall in revenues to Rs 214 crore in FY12 with net profit slipping over 85 per cent to Rs 1.13 crore as compared to the previous fiscal.