Micro Labs has acquired a majority controlling stake in R A Chem Pharma Limited. This move takes the total head count of the Bengaluru-based company to approximately 10,000. The mid-sized Hyderabad-based company is a USFDA approved manufacturing facility for active pharmaceutical ingredients (APIs). It is also engaged in the production of formulations and has a CRO.

“Now RA Chem with its core profitable API business complements our strategy to strengthen our capabilities. In addition, its formulations and CRO business are in sync with our long term goals for the regulated markets”, Dilip Surana, chairman & managing director, Micro Labs Limited told Pharmabiz in an interaction.

“Our focus has been on formulations. Therefore RA Pharma’s forte in API capabilities strengthens our backward integration into this space. Its US FDA approved facility gives us an additional production site too. Another point is Hyderabad is the bulk drug capital of the country, known for competitive costs. So this acquisition brings to the table these advantages,” he added.

“The buyout is through internal accruals and partly debt. A few years ago we did assess the options for going public or even look at private equity for fund infusion. But we have now decided to continue on our own”, said the Micro Labs chief.

The company also ensured that during this acquisition, the workforce from the new entity remained untouched. “We retained the entire staff on similar lines of the 2002 Eros Pharma acquisition. Unless any person has moved on for better prospects or retired, we don’t intend to remove a single member. Our intent is not to upset the applecart at all. Our philosophy has been to acquire well managed companies where the promoters desired to sell off for other reasons and not because the business was not running well”, he said.

In October 2016, Micro Labs made a calculative sale of its Baddi unit to Indoco Remedies. We invested in Baddi only because of its tax benefits as the Union government then declared its excise free zone status. This facility mainly catered to the domestic market. Now we have shifted the production to cater for domestic market needs to Sikkim where we benefit from both infrastructure and work culture. At this facility on a single shift basis the monthly capacity for tablets is Rs.25.50 crore, capsules is 4.5 crore and eye drops is 20 lakh. The annual capacity here for tablets is 306 crore, capsules is 54 crore and eye drops is 2.4 crore, he said.