Ranbaxy had only a single manufacturing unit in China through RGCL. Now it will supply drugs to the Chinese market from other global production sites. Since Japan’s Daiichi Sankyo now owns Ranbaxy and it is already present in the Chinese market, it makes sense for Ranbaxy to exit a production facility in mainland China, said analysts. Ranbaxy Laboratories has sold its entire stake in Chinese joint venture Ranbaxy Ghuangzhou China Limited (RGCL) to HNG Chembio Pharmacy Company for an undisclosed amount.
HNG Chembio Pharmacy, based in the Hunan province of China, is engaged in marketing and distributing finished dosages and active pharmaceutical ingredients. Ranbaxy had entered into the joint venture in 1993 and started production in 1995. Ranbaxy held a majority 83 per cent stake in the three-way joint venture, formed in 1993 among the Ranbaxy group, Guangzhou Baiyunshan Pharmaceutical Company and Hong Kong- based China and Hong Kong New Chemic. The China unit catered to the local market. Last year, RGCL contributed around $20 million to the overall revenue of the company, and registered a growth of 17 per cent.
“This transaction will help Ranbaxy in consolidating the overall global manufacturing operations by bringing synergies and in reducing complexities in production,” said a company spokesperson of Ranbaxy Laboratories. “China continues to be an important market for Ranbaxy and the company believes this new approach will create greater value,” said Ranbaxy. This transaction is part of Ranbaxy’s endeavour to develop a new business model for China which entails the marketing of value-added pharmaceutical formulations and the consolidation of manufacturing operations for cost synergies, it said.
