JB Chemicals makes Strategic Investment of USD 5.1 Mn in Biotech Laboratories, South Africa

JB Chemicals & Pharmaceuticals Ltd on December 14, 2006 has announced that the Company has signed a definitive agreement to make a strategic investment of USD 5.1 mn. in Biotech Laboratories (Pty) Ltd. (Biotech) of South Africa. The transaction is valued at 1.1 times of Biotech sales of last year. The investment will entitle the Company to own significant minority stake of the issued capital in Biotech with an option to increase its holding further in future. The transaction, subject to requisite approvals and conditions precedent, is expected to be completed during the first quarter of 2007.

Key Highlights :

1. Biotech is ranked 10th (IMS, June 2005) amongst the generic Companies in the pharmaceutical private market in South Africa.

2. Biotech is amongst the fast growing generic pharmaceutical Companies in South Africa.

3. Strategic investment in Biotech will help the Company to enter market that is lucrative and fast growing.

4. Biotech owns a significant number of product dossiers. The Company plans to leverage the same by undertaking the manufacturing of these products through site variation opportunities at its own facilities in India.

5. The Company will be able to exploit the markets of Southern African Developing Countries (SADC) through Biotech apart from its existing markets.

6. Going forward, the Company plans to launch Doktor Mom range of products in South African markets.

Commenting on the strategic investment, Mr. J B Mody, Chairman & Managing Director of the Company, said, "The investment into Biotech is a strategic fit for JBCPL. This investment in Biotech results in considerable synergies for both companies and will allow JBCPL to tap the lucrative high growth South African and other African markets through the launch of its ethical and OTC range of products including Doktor Mom."

Biotech is a strong BEE Company and enjoys this status for the tender. This will further strengthen the Company's position in South Africa in terms of participation in government and sector related tenders. South Africa is the largest pharmaceutical market in Africa, valued at close to USD 3 billion, with high potential for growth. Generics are becoming prevalent with the government promoting the need for generic medicines.

Source : Equity Bulls

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