Cipla Medpro gets large contract to make HIV drugs for South Africa

Last year, India's Cipla forked over $500 million to get complete ownership of South Africa's Cipla Medpro. A new contract from the South African government for antiretroviral drugs sheds some light on the potential motivation for more than doubling its original offer to get the whole company.

Cipla Medpro has been awarded a three-year, 2 billion-rand ($173 million) contract to manufacture antiretroviral drugs for South Africa's anti-AIDS program, Bloomberg reports. It is the third government contract the company has gotten this year. The drugs will be manufactured at the company's plant in Kwazulu-Natal province.

South Africa's antiretroviral treatment program is the largest in the world, Bloomberg reports, including 2.2 million people. That is nearly twice the number in 2008 but only about a third of the estimated 6.4 million South Africans with HIV, the news service says, citing statistics from the Human Sciences Research Council. The government has a goal of cutting the number of new infections in half by 2016.

Cipla was Cipla Medpro's primary drug supplier as part of a joint venture until last year. Cipla initially offered about $215 million for the 50% stake it didn't own but then upped that to about $500 million when it the first offer was rejected.

- read the Bloomberg story