The acquisition of substantial stake in Mchem group helps by the Hyderabad-based Matrix to backward integrate into China for manufacture of intermediates and will help consolidate its position as a major supplier of active pharmaceutical ingredients (APIs), particularly anti-retrovirals (ARVs), worldwide.

Matrix entered into a Share Purchase Agreement (SPA) with the promoters of Mchem group, China for the acquisition of controlling stake of about 60 per cent in the Mchem group during September 2005.

The share purchase agreement is in line with the strategic intent and the memorandum of understanding that the company had signed earlier with Mchem to gain access to the comparative advantage that China provides in the sourcing of pharmaceutical chemicals and intermediates and to establish a cost effective supply chain.

This will also provide access to Matrix, through Mchem, into Chinese pharmaceutical market, which is growing at a rapid pace. Based on the latest reports on HIV/AIDS infections worldwide, the demand for ARVs is also expected to grow considerably in China over the next few years. China has an estimated 8,40,000 known AIDS / HIV victims, largely concentrated between 20 and 39 years of age.

According to N Prasad, executive chairman of Matrix Labs, "The acquisition of substantial stake in Mchem group is a strategic step towards strengthening our supply chain and to establish as a cost effective manufacturer. With absolutely no overlap of products, customers and markets, Matrix would further strengthen their presence in the global markets."

Based in Xiamen, on the East coast of China, Mchem group manufactures pharmaceutical products ranging from basic chemicals, intermediates, active pharmaceutical ingredients and finished dosage forms with a group turnover of about US $ 35 Million. Mchem also has 40 finished dosage forms registrations approved for manufacture/supply in China.

Mchem group is engaged in the manufacture of HIV/AIDS medicines for more than five years and also supplies to state-owned companies in certain Asian countries. Mchem group also earlier signed an agreement with the Clinton Foundation making it the only Chinese company supplying intermediates, APIs to foundation Partners besides supplying finished dosage forms to Chinese government sponsored HIV programme.

Matrix is engaged in the manufacture of active pharmaceutical ingredients (APIs) and solid oral dosage forms. Matrix is one of the fastest growing API manufacturers in India and focuses on regulated markets such as the US and EU. The company has a wide range of products in CNS, anti-bacterial, anti-AIDS, anti-asthmatic, cardiovascular, gastro intestinal, anti-fungal, pain management and life style related therapeutic segments.