Drugmaker Strides Shasun Ltd said on Wednesday it has received board approval to hive off its active pharmaceuticals ingredients (API) business into a wholly owned subsidiary.
“With the new set of regulatory and statutory compliance, the commodity API business will need its own leadership team and strategy. To achieve its strategic objectives, the business will be carved out,†the company said in a filing to the stock exchanges.
The Bengaluru-based company said its API, or bulk drugs, division had revenue of Rs 712.2 crore in the year through March 2016. That was slightly more than a fifth of the company’s total revenue.
The hive-off, which is likely to be completed in the October-December period, will not result in the change in the shareholding pattern of the listed company.
Arun Kumar, executive vice chairman and managing director, said the company's commodity API business continues to put pressure on margins with cost of compliance going up.
Strides Shasun has been on an acquisition and divestment spree over the past year.
In May, Strides said its board approved the divestment of its contract research and manufacturing services and API unit, Shasun Pharma Solutions Ltd, UK, for an enterprise value of £25 million (Rs 240 crore).
In March, the company agreed to acquire three over-the-counter (OTC) brands from Sweden’s Moberg Pharma for $10 million plus inventory value at closing.
In February, Strides Shasun agreed to pay AUD 15 million (US$10.6 million) upfront to buy a 51% stake in Australian pharmaceutical and research company Generic Partners Holdings Co. Pty Ltd and acquire a 51% stake in Kenyan drugmaker Universal Corporation Ltd for an initial payout of $11 million in cash.
The company said on Wednesday it completed the three acquisitions during the April-June quarter.
Strides Shasun makes tablets, hard- and soft-gelatin capsules, sachets and semi-solids, among others. It has 14 manufacturing facilities across three continents.
Shares of Strides Shasun ended at Rs 1,059.05 apiece on the Bombay Stock Exchange, down 4.7% in a Mumbai market that fell 0.2%.
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