Arch Pharmalabs Ltd., the pharmaceutical major operating in the API and Intermediaries business, announced the acquisition of Watsol Organics Ltd., a manufacturer of pharmaceuticals and agro-chemical intermediates in Hyderabad.

According to a company press release, this acquisition gives Arch Pharmalabs access to key raw materials and intermediates in the manufacture of isoxazole side chains. Watsol Organics was acquired for an enterprise value of Rs. 30 crore. The acquisition is completely funded through internal accruals.

Commenting on the acquisition, Ajit Kamath, chairman and managing director, Arch Pharmalabs Ltd. said, "Inorganic growth is a strong component of our growth strategy. Strategic fit and value proposition have always been the drivers for acquisitions. Overall, this is the fifth acquisition by the company and the third in Hyderabad. Keeping in line with the company's "Zero Conflict business model" Sibra Pharmaceuticals was earlier acquired in March 2007 for an enterprise value of Rs. 40 crore. Both the acquired companies are profitable. Together with the acquisition we will invest to the tune of Rs. 120 crore for the expansion of our capacities. The three facilities put together in Hyderabad will contribute around Rs. 500 crore to the topline by the end of FY 2010."

"The acquisition of Watsol Organics will strategically supplement and further augment our global leadership position in the isoxazole side chains business thus meeting the growing demand in the Industry. The Sibra facility will enhance our API business and open new avenues for us. Arch Pharmalabs will consolidate Sibra's businesses and introduce new high-value API's in technical collaboration with European majors. Arch also plans to increase its product offering in the anti-retroviral drugs (ARV's) segment from this acquisition. The ARV segment has huge potential to cater to various programmes under the aegis of WHO, UN, PEPFAR and other relief programmes. Arch hopes to capitalize on this market. Further, the facility will be used to cater to the demand in the CRAMS sector for API's and Intermediates," Kamath added.

Watsol's facility is located 60 kms away from Hyderabad, spans over 40 acres of which 12 acres are currently being utilized. The plant has 21 reactors with a capacity of 44KL. Watsol also helps Arch in its backward integration plans, since its manufactures a key raw material which is used in the manufacture of the isoxazole side chains. The company is now a subsidiary of Arch Pharmalabs Ltd.

The Sibra facility is geared to manufacture variety of active pharmaceuticals ingredients (API). The plant is WHO-GMP and ISO 9000:2001 certified. Sibra Pharmaceuticals is now a subsidiary of Arch Pharmalabs Limited. The plant is capable of handling multiple products and multiple reactions. Plant has been operational for just over 18 months and is in the best of conditions. There is a further scope of expansion. The acquisition of Sibra Pharma has given Arch access to the strong talent pool, competitive manufacturing processes and modern quality control lab with the latest QC instruments and equipments.

Arch Pharmalabs founded in 1999 by Ajit Kamath, Manoj Jain and Rajendra Kaimal, with the takeover of Merven Drug Products Limited, Hyderabad, operates in the API and Intermediaries business. From a Rs. 20 crore company with 3 products in the year 1999, to an above Rs 350 crore company in 2007 with 55 products in its portfolio, Arch Pharmalabs has shown consistent growth. Their product portfolio ranges across all therapeutic segments. On the exports front, Arch Pharmalabs has a healthy exports profile in Europe and rest of the world. Arch Pharmalabs has entered into an agreement with Codexis for its bio- catalysts and proprietary biocatalytic process for producing Intermediates & APIs in a more cost effective and environment friendly manner.