Japan's Meiji snaps up Indian CMO Medreich for $290M

Meiji's pharmaceutical research center in Yokohama--Courtesy of Meiji

Japan's Meiji Holdings, a small conglomerate that manufactures pharmaceuticals as well as candy and dairy products, is buying an Indian contract manufacturer as it acts on a promise to become a leading Japanese producer of generic drugs. It follows other Japanese companies that have been picking up Indian companies to fill out drug manufacturing gaps.

The company will pay $290 million for Bangalore-based Medreich, moneycontrol reports. The disclosure was made in a filing with the Tokyo stock exchange Wednesday. According to the Medreich website, the company has 6 manufacturing plants and 2,000 employees worldwide.

In 2010, the Meiji Group laid out its corporate plan for the next decade. Among its goals was for its pharma unit to become a leading Japanese company in anti-infectives, drugs for treating central nervous system disorders and generics. The company recently reported that for its fiscal year ending in March, its pharma unit had sales of ¥135 million ($1.3 million).

One of the company's other holdings, Tedec-Meiji Farma, ran into problems with the FDA in 2012, when it received a warning letter for a plant in Alcalá de Henares, Spain. The FDA said that when a lot of tablets being tested for 24-month stability was found to be out of spec, Tedec-Meiji Farma tested and averaged results from another sample to get an acceptable result but never looked for the root cause. The FDA issued a closeout letter for the facility in June 2013.

Other Japanese companies have been looking to India for opportunities. Mitsubishi said in March it was investing an undisclosed amount so that Hyderabad-based Neuland Laboratories can expand its API production in India and dedicate it to Mitsubishi. The deal follows Mitsubishi's decision to buy Japan-based capsulemaker Qualicaps for about $650 million by several months.

The most prominent example of a Japanese company trying to harness India's cheap generic drug production is Daiichi Sankyo's 2008 investment of $4.6 billion to get control of Ranbaxy Laboratories. Daiichi took over India's largest generic drugmaker shortly before the FDA took after it for drug testing and manufacturing shortcomings that have yet to be resolved. Daiichi agreed in April to sell its stake to India's Sun Pharmaceutical for $3.2 billion in stock.

- read the moneycontrol story

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