The Hindu Business Line : Dr Reddy's to buy Roche's Mexico unit for $59 m

As per the definitive agreement , the acquisition, including all employees and business supply contracts, is being made at a total investment outlay of about $59 million including working capital, Dr Reddy's announced here on Tuesday.

The acquisition is expected to lead to a ten-fold growth in the custom pharmaceutical services business of Dr Reddy's Laboratories.

The business at the Cuernavaca facility involves the manufacture and sale of APIs and intermediates to Roche and other innovator companies. The product portfolio comprises about 18 products including mature APIs and a range of intermediates and steroids.

Dr Reddy's said this acquisition adds unique steroids manufacturing capabilities to it.

The Cuernavaca site at Mexico employs nearly 340 people and has been inspected by the United States Food and Drug Administration and other international regulatory agencies.

Dr Reddy's Chief Executive Officer, Mr G.V. Prasad, said, "With the acquisition of Roche's API business at the Mexico site, Dr Reddy's will emerge as a leading player in the custom pharmaceutical services (CPS) business and position itself as a partner of choice for innovator companies across the globe with service offerings spanning the entire value chain of pharmaceutical services."

According to Mr Prasad, "This strategic acquisition provides an opportunity for our CPS business to grow from $10 million to $100 million over the next 18 months. The integration of these businesses, people and technology, the expertise of the management team and distinctive manufacturing capability at the Mexico site, with that of Dr Reddy's strengths in process chemistry and world-class research capabilities will provide a strong foundation to drive the next wave of growth in our CPS business."

Dr Reddy's expects the acquisition to be completed by December-end. The acquisition will be EPS accretive to Dr Reddy's and the full year financial impact of the acquisition will be realised from 2006-07, said a release.

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