INDIA BUSINESS WORLD - JUNE 1^st - JUNE 30^th - 2008

ARCH PHARMALABS BUYS BENZOCHEM FOR RS 100 CR

PRIVATE equity-controlled Arch Pharmalabs has acquired a controlling stake in Benzochem Lifesciences, an active pharmaceutical ingredients (API) maker, for around Rs 100 crore. Sources said Arch would buy around 70% stake in Benzochem Lifesciences while the balance 30% will remain with the promoters of Benzochem. When contacted, Arch Pharmalabs CMD Ajit Kamath declined to comment. Benzochem is a privatelyheld company engaged in API manufacturing for oncology and anti-malarial drug segment. The company has a FDAcompliant manufacturing facility in Tarapur. Benzochem has also filed drug master file (DMF) application for all anti-cancer APIs. The company closed the last financial year with a top line of around Rs 150 crore. Arch Pharmalabs, controlled by three PE firms —ICICI Venture, IL& FS and SwissTec—is one of the leading API manufacturers in India. Arch Pharma has raised four rounds of PE over the past four years by diluting 55% of its equity to the PE firms. Sources said Arch would fund the acquisition through internal accruals and proceeds from the recentlyconcluded rights issue. Many Indian pharma firms have identified contract research and manufacturing services (CRMS) as of the important segment for growth. The acquisition makes sense for Arch Pharmalabs as the company has a development pipeline for various products in the oncology segment.