Medreich Limited has been acquired by Meiji Seika Pharma following clearances from Foreign Investment Promotion Board (FIPB) and Competition Commission of India (CCI). The deal value was not disclosed by Medreich Board.
The first announcement of the buyout by Meiji came in June 2014 when the share purchase agreement was signed. The entire process of the takeover took around 8 months to be completed after signing of the share purchase agreement.
"The deal is the first 100% acquisition of a pharma company by a Japanese company in India. Post acquisition, the company will continue to be known as ‘Medreich’. The entire 2,700 staff are retained with no job losses", CP Bothra, managing director, Medreich Limited told Pharmabiz.
The 39 year-old medium sized contract development and manufacturing organisation (CDMO) Medreich, which works for many of the top ten global drug majors, will combine Japanese and Indian management models of business to deliver greater value. Qualified work standards will continue to be the fulcrum of its operations.
“The key reason for the M&A was primarily to achieve accelerated growth through synergies and greater global reach, as Medreich was vying to be part of a large global entity. A complete acquisition by a leading Japanese pharma major was the best that could come by", Medreich chief added.
Meiji Seika Pharma is a subsidiary of Meiji Holdings Co. For Meiji, the intent of the acquisition was to get hold of cost-competitive manufacturing infrastructure and to broaden its sales network in many continents, which are seen to be the future of pharmaceutical business growth. Meiji could now expand its CDMO business leveraging on Medreich’s manufacturing capabilities, regulatory accreditations and existing blue chip customer base comprising of GSK, Pfizer, Novartis, Sanofi, Mylan, Adcock, etc. The Medreich’s employees would play a key role in the future growth of the company.
For Karnataka, the entry of a Japanese giant into the pharmaceutical industrial landscape is expected to fuel global drug majors interests in the state. Post Medreich acquisition efforts in June 2014, the state also witnessed the hiving off a profitable business arm of the Jagdale Industries, a multi product company that sold its ORS-L brand, a ready-to-drink product supplemented with electrolytes to Johnson & Johnson Pte. Ltd., Singapore in November 2014. In September 2014, Strides Arcolab and Shasun Pharmaceuticals announced their merger.
“Now these acquisitions have set the pace for inorganic growth and such a strategy would enable consolidation and strengthen companies growth and revenue prospects,. Moreover, much of the pharma business are led by first generation entrepreneurs and therefore a succession policy is found wanting. Therefore mergers and takeovers by foreign and Indian companies would ensure continuity of experienced and capable leadership, observed Jatish N Seth, president, Karnataka Drugs and Pharmaceuticals Association.