Aurobindo divests Chinese subsidiary to Sinopharm

Published: 13-Jan-2011

ADBPL will form part of new Sinopharm antibiotic manufacturing centre

Indian generics manufacturer Aurobindo Pharma Ltd (APL) is to sell its stake in its loss-making Chinese subsidiary Aurobindo (Datong) Bio Pharma Co Ltd (ADBPL) to China National Pharmaceutical Group Corporation (Sinopharm).

ADBPL manufactures 6APA, a derivative of Penicillin-G. APL consumes most of the plant’s production.

The unit has been incurring losses due to issues related to economies of scale.

After the acquisition of 51% equity in ADBPL, Sinopharm will invest capital to enhance its shareholding to 80.50%. APL will retain a 19.5% stake. APL's US$23m loan to ADBPL will also be paid back.

APL says Sinopharm also will provide sufficient funds to relocate the plant, significantly enhance capacity and downstream products leading to better economies of scale and reduced cost of production. It will continue to supply raw materials to ADPL.

The ADBPL investment will be the core of Sinopharm’s plans to build an antibiotic manufacturing centre in Datong.

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