Cipla Ltd, the Netherlands-based drugmaker is selling its indirect subsidiary, Cipla Croatia d.o.o., to Zagreb-based pharmaceutical company PharmaS d.o.o.
In a stock-exchange disclosure Cipla Ltd said that, Cipla Holding B.V. has entered into an agreement with PharmaS to sell its 100% equity stake in Cipla Croatia for $1.1 million (Rs 7 crore). The buyer will pay $550,000 upfront and the remaining amount will paid in two tranches, on the first and second anniversary of the closing of the deal, according to the agreement. PharmaS will also pay all outstanding liabilities and net working capital of Cipla Croatia as on the date of the closure, but will not exceed $2.5 million. Company also revealed that, this sale is a part of company’s strategy to operate a business-t-business model in Europe.
Cipla has changed its business model, moving from direct-to-market to the partnership-led B2B model in most countries across Europe. The company is expecting stronger growth in latest annual report as a result of significant improved profitability of its European businesses, which would support stronger growth.
About 4% to its overall revenues of Cipla is contributed by its European business. As per the website of PharmaS, they manufacture and distribute high-quality pharmaceutical products, generic prescription medicines and a variety of over-the-counter pharmaceutical products. Cipla Croatia’s revenue was Rs 17.38 crore and net-worth was Rs 4.53 crore in the year through March 2017. In 2016-17, Cipla’s consolidated income was at Rs 14,858.9 crore and its net profit was Rs 1,042.4 crore.
Earlier this year, it sold its animal health business in South Africa to Ascendis Health Ltd for $29 million. In November 2016, it had divested its stake in US-based Chase Pharmaceuticals to Allergan Inc for an upfront payment of $ 125 million to earn a fourfold return on its investment.
In July 2015, the drug maker had sold a stake in its consumer business to Fidelity Growth Partners. In July 2016, Cipla and Aurobindo Pharma Ltd had agreed to acquire some generic drugs from Teva Pharmaceutical Industries Ltd in the US to strengthen their presence in the world’s largest pharmaceutical market.