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Alembic demerges pharma business

MUMBAI: Alembic, the pharma major, has announced the re-organisation of its business which consists of demerger of its core pharmaceutical business into a 100 per cent subsidiary company, Alembic Pharma Ltd., and the reorganisation of its Vadodara undertaking.

In the scheme of arrangement approved by the board on Tuesday, the company proposes to demerge its domestic formulation, international generic and active pharmaceutical ingredients (API) business to its subsidiary, Alembic Pharma.

Vadodara facility

Alembic will retain its Vadodara manufacturing facility, which has fermentation facilities producing Penicillin G and Erythromycin Thiocyanate and other products along with the power infrastructure and the land assets at Vadodara.

Under the demerger scheme, shareholders of Alembic will get one equity share of the face value of Rs. 2 each in the resulting company, that is, Alembic Pharma Limited (APL), for every one equity share of the face value of Rs. 2 each held by them in the company. This will be in addition to the equity shares already held by the shareholders in Alembic. Post-demerger, the equity share capital of Alembic Pharma will be Rs. 37.70 crore of which Alembic will hold 29.18 per cent and the balance will be held by shareholders of Alembic.

After the demerger, Alembic will continue to be listed and an application will be made to the Bombay and National stock exchanges to list Alembic Pharma.

According to a company release, the demerger will allow the two companies to focus on their respective core businesses.

Alembic Pharma will become a pure pharma player with focus on domestic formulation business and international business largely driven by the regulated markets and research and development activities.

Alembic will continue to operate the Vadodara undertaking (including power generating and other utilities) whose products are largely commoditised and face competition from Chinese companies. In future, Alembic proposes to develop its real estate into commercial and residential properties.

This restructuring is subject to approval from shareholders, stock exchanges, other authorities and the High Court of Gujarat and the process is likely to take 7-9 months.

Established in 1907, Alembic is vertically integrated and can develop, manufacture and market pharmaceutical products, pharmaceutical substances and intermediates. It is the market leader in Macrolides segment of anti-infective drugs in India.

It has manufacturing facilities in Gujarat and Himachal Pradesh. While Vadodara has a research centre and fermentation and other API facilities, the Panelav facility houses the API and U.S.FDA approved formulation manufacturing plants. The plant at Baddi, Himachal Pradesh manufactures formulations for the domestic and other export market.

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