Cipla: Teaming up with largest vaccine maker to bolster South African business

Cipla: Teaming up with largest vaccine maker to bolster South African business

NEW DELHI (NewsRise) — Indian drugmaker Cipla has signed an exclusive deal with billionaire Cyrus Poonawalla’s Serum Institute of India to supply vaccines in South Africa, expanding its partnership with the world’s biggest vaccine maker to a new market.

   The distribution deal follows comments from Poonawalla earlier this year that the two companies were discussing a merger that would potentially give Serum a majority stake in India’s fourth-largest drugmaker by sales.  Serum held initial talks with Cipla for a merger, Poonawalla had said in interview with television channel CNBC-TV18 earlier this year. Cipla Chief Executive Subhanu Saxena, however, has said the company hasn’t received any formal offers.

   Serum, which makes vaccines injected into more than 60% of the world’s children, will grant Cipla Medpro, the company’s South African unit,  exclusivity and first right of refusal to its products in the African nation, the companies said in a statement on Thursday.

   Cipla and Serum struck a distribution agreement in November for affordable pediatric vaccines in Europe. Poonawalla said in an interview to Bloomberg News in May that a possible merger with Cipla “would make sense” if their European venture is successful.

   Cipla, founded in 1935 by scientist Khwaja Abdul Hamied, made its name selling generic HIV therapies in Africa, while Pune-based Serum has grown into the world’s largest vaccine maker by the number of doses sold. The companies share a focus on providing affordable medicine.
   While Serum lacks distribution abroad, Cipla has strengthened its sales network overseas, generating more than half its revenue from foreign markets. That makes the two natural allies, analysts said.

   “The distribution deal makes sense,” Sarabjit Kour Nangra, Vice President Research – Pharma at Angel Broking, said. “Serum doesn’t have much of a presence in external markets, while Cipla provides a strong distribution network overseas.”
   The distribution deal comes at a time when generic drugmakers such as Sun Pharmaceutical Industries, Cipla and Lupin in India’s $15 billion pharmaceutical industry are striving to develop niche products and treatments that are difficult to copy. Cipla has been focusing on expanding its injectable and respiratory portfolios to spur growth.

   The injectable drug delivery market is expected to reach $574.8 Billion by 2020 from $326.2 Billion in 2015, according to research firm MarketsandMarkets.

   South Africa, where Cipla has a 5% share of the total drugs market, contributes 14% to the overall revenue, according to its annual report.

   The company last month said it will acquire two U.S. generic drug companies InvaGen Pharmaceuticals and Exelan Pharmaceuticals for $550 million, as part of its efforts to boost business in the world’s largest pharmaceutical market. Cipla’s profit for the April-June quarter more than doubled, beating market expectations, driven by strong overseas sales.

   Cipla shares rose marginally to 683 rupees on Friday morning, tracking gains in the benchmark S&P BSE Sensex index that rose 0.95%. The stock has gained about 9% this year, outperforming the benchmark index.

Cipla: Teaming up with largest vaccine maker to bolster South African business