Matrix Laboratories Ltd has entered into a Share Purchase Agreement (SPA) with the promoters of Mchem group, China for the acquisition of controlling stake of about 60% in the Mchem group.

According to a company release, 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 & intermediates, and to establish a cost effective supply chain.

The release states, the acquisition of substantial stake in Mchem group will help the company 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.

"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," said N Prasad, the executive chairman of the company.

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.

The closing of the transaction is expected to be completed before end December 2005 and is subject to fulfilment of certain conditions/formalities and obtaining requisite approvals from the regulatory authorities, the release added.