Cipla Ltd has announced that its UK subsidiary will acquire the stake of a local partner in its Chinese manufacturing venture, known as Cipla (Jiangsu) Pharmaceuticals Co. The announcement was made on Wednesday, detailing that Cipla (EU) Ltd. intends to purchase the entire 6.9% equity interest held by Jiangsu Xidi Pharmaceuticals Co. in the subsidiary. This acquisition will be conducted for a sum of 35 million Chinese yuan, which is approximately equivalent to Rs 42.6 crore.
Once the deal is finalized, Cipla Jiangsu will operate as a wholly owned subsidiary of Cipla. Cipla Jiangsu was established in China in August 2019 as a joint venture between Cipla (EU) and Jiangsu Xidi Pharmaceuticals. The primary objective of this partnership was to manufacture, market, and distribute pharmaceutical products, along with offering research and development services, as well as analytical development services.
Located in Qidong, Jiangsu province, Cipla Jiangsu’s manufacturing facility focuses mainly on producing inhalation response products, a significant area in the pharmaceutical industry. The completion of this acquisition is contingent upon adherence to relevant laws and obtaining necessary approvals from regulatory bodies in China. Cipla expects to finalize this transaction by November 15, 2024.
This acquisition is conducted in accordance with the existing joint venture agreement between Cipla and Xidi, allowing Cipla EU to gain full control and ownership of Cipla Jiangsu, enhancing its operational capabilities in the region. Cipla Jiangsu is strategically positioned to cater to the growing pharmaceutical needs in China, and this acquisition will enable Cipla to leverage its full operational and management capabilities at the facility.
The company is optimistic about starting supplies to the U.S. market from its Chinese facility within the second half of the current fiscal year, pending approval from the U.S. Food and Drug Administration (FDA). Umag Vohra, the Managing Director and Global CEO of Cipla, expressed confidence in the company’s potential to expand its presence in the U.S. market through this facility.
Following the announcement of this acquisition, Cipla’s stock experienced a slight increase, closing 0.4% higher at Rs 1,643.7 per share on the Bombay Stock Exchange (BSE). This rise occurred in advance of the announcement, contrasting with a 0.3% gain in the benchmark Sensex. According to Bloomberg data, out of 37 analysts monitoring Cipla’s stock, 21 have issued a “buy” rating, while nine analysts suggest a “hold” position and seven recommend a “sell.”
The average 12-month price target among these analysts stands at Rs 1,630.26, indicating a potential decline of 0.8%. Overall, this acquisition marks a significant strategic move for Cipla, enhancing its foothold in China and enabling it to better serve global markets, particularly in the United States.
Cipla Ltd is a leading global pharmaceutical company headquartered in India, known for its extensive range of medications and healthcare solutions. Established in 1935, Cipla focuses on innovation and accessibility, producing high-quality generic and specialty medicines across various therapeutic areas. The company is committed to improving global health and expanding its presence in emerging markets.
