Strides Arcolab Ltd has completed the sale of Agila Specialties, its injectable drugs division, to US-based Mylan Inc for a total consideration of $1.75 billion (around Rs 10,780 crore).
However, Strides said it has agreed to Mylan holding back $250 million as it had received a warning letter from the US Food and Drug Administration (FDA) over one of its injectable facilities in Bangalore.
In August this year, the US regulator issued a letter, called Form 483, seeking explanation regarding the manufacturing process in eight out of its 15 inspections, which it had carried out in June. The company management said these issues will be addressed and it will not impact the existing transactions.
Since the initial announcement of the Strides-Mylan deal in February, the board of directors has approved final transaction terms that include “a hold back of $250 million contingent upon satisfaction of certain regulatory conditions”. The Strides management expects those contingent conditions to be satisfied some time in 2014, without mentioning the exact time-frame.
Recently, Indian companies have been coming under the US FDA lens. Earlier in the day, Jubilant Life Sciences Ltd said it had received a warning from US authorities over manufacturing practices at one of its American plants.
Despite this, Strides is confident. Its founder and group CEO Arun Kumar said: “We are confident that Agila will play a significant role in Mylan’s growth strategy to become a global injectable leader.”
Agila currently produces drugs across nine plants in India, Brazil and Poland, eight of which have been approved by the US FDA. As a part of this deal, around 1,800 employees of Strides Group would become part of Mylan.
venkatesh.ganesh@thehindu.co.in