Three Hyderabad-based pharmaceutical firms namely Vorin Laboratories Ltd, Medicorp Technologies India Ltd and Matrix Laboratories Ltd would merge into a single entity and would emerge as the third largest pharmaceutical company in Andhra Pradesh after Dr Reddy's Labs and Aurobindo Pharma.

The Boards of the three companies would meet on September 19 to finalise the merger and decide on the swap deals. While the Board of Vorin would meet in Delhi, the two other Boards would meet in Chennai. In the new company Matrix would have the controlling stake.

In the Rs 42-crore Medicorp, Matrix holds 55% equity, the Chennai-based Shriram Group holds 24% and the rest is with the public shareholders. Matrix acquired 30.42 % share of ICICI holding in Medicrop and consolidated its holding through an open offer in April/May this year.

In the Rs 168-crore Vorin, Ranbaxy holds 51% share, non-resident Indians and overseas corporate bodies hold 15% and the remaining 34% is with the public shareholders.

Matrix Laboratories Ltd is a bulk drug manufacturer and an active pharma ingredient (API) company. The Rs 102-crore Matrix is controlled by N Prasad, former Managing Director of Vorin Labs and Fine Drugs & Chemicals Ltd. Vorin Labs has a controlling stake of 55% in the loss-making Fine Drugs and Chemicals Ltd, which has not been considered for the merger because the company is under the purview of the Board for Industrial and Financial Reconstruction.

According to reports, the promoters of Matrix would control the merged company as they hold 60% in Matrix and 55% in Medicorp. Besides, Matrix holds 100% stake in Medicon Labs, a Hyderabad-based formulations company, recently.

Vorin has a paid up equity base of Rs 8.1 crore and reserves and surplus of Rs 16.22 crore. Medicorp has Rs 24.24 crore equity and Rs 5.78 crore as reserves and surplus, whereas, Matrix has a paid-up equity of Rs 7.19 crore and reserves and surplus of Rs 14.32 crore.

Matrix produces anti-AIDS drugs, anti-depressants, anti-bacterial and anti-histamines. Medicorp has a US FDA approved facility for Acyclovir and its product range includes anti-virals, anti-fungals, anti-ulcers and cardiac drugs. Vorin has a strong presence in products such as ciprofloxacin, enrofloxacin and anti-AIDS drugs such as Indinavir.

Medicorp, which is also into the bulk drugs manufacturing has developed over 20 products and is expecting to get US FDA approval for all the products going off-patent from 2003, for the next seven years. The company's main focus is on the advanced markets of the US, Canada and Europe.

Vorin Laboratories Ltd, a subsidiary of Ranbaxy Laboratories, is into the manufacture of bulk actives and intermediates. Vorin supplies bulk ciprofloxacin and other intermediates to Ranbaxy, which is the largest pharma company in India in terms of sales. In the merged company, Ranbaxy will continue to hold equity and the new company will do business with Ranbaxy benefiting all the three companies.

The shareholders of the merged companies would also benefit as the new company would be able to better utilise the economies of scale and were being merged into a larger and successful company.

For the year ended 2001-02, Medicorp had net sales of Rs 40.65 crore and a net loss of Rs 4.83 crore. Vorin Laboratories had a turnover of Rs 157.8 crore for the year ended December 31, 2001, with a net profit of Rs 0.92 crore. Matrix recorded a turnover of Rs 103.88 crore for 2001-02 with a net profit of Rs 4.48 crore. All the three companies are traded on the stock exchanges.