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Cadila Health plans US, Brazil subsidiaries

BS Corporate Bureau in Mumbai

Cadila Healthcare, the Rs 588 crore (Rs 5.88-billion) flagship company of the Rs 1,000 crore (Rs 10-billion) Ahmedabad-based Zydus Cadila group, has decided to set up wholly owned subsidiaries in the US and Brazil.

As part of its international business strategy, the company will form Zydus Healthcare Brazil as a wholly owned subsidiary of Zydus International of Ireland, it informed the Bombay Stock Exchange.

Zydus International is a wholly owned subsidiary of Cadila Healthcare, and markets the company's products around the world.

Zydus Healthcare LLC will also be floated as a wholly owned subsidiary of Zydus International of Ireland to develop the overseas business.

The board of Cadila Healthcare, which met on September 28, also decided to issue 6.90 per cent unsecured redeemable non-convertible debentures aggregating Rs 35 crore (Rs 350 million). The company will also issue 7 per cent secured redeemable non-convertible debentures aggregating Rs 20 crore (Rs 200 million), for which the company has already received 'P1+' rating from Crisil.

The company has been looking at joint venture partners in regulated overseas markets such as the US and UK in order to acquire marketing and distribution leverage in these markets.

According to analysts, the future of the pharmaceutical sector post 2005 hinges on regulated markets as well as R&D.

However, at present, Indian pharmaceutical companies account for a minuscule share of less than 1 per cent of the $400 billion global market, they added. Recently, Zydus Cadila Healthcare announced plans to invest Rs 20.5 crore (Rs 205 million) to buy 100 per cent stake in Vadodara-based Banyan Chemicals.

Banyan, with sales of Rs 20 crore (Rs 200 million), is promoted by a group of non-resident Indians based in the US, and exports bulk drugs.

The acquisition is expected to help Cadila Healthcare make a foray into the high-margin US market. Currently, Banyan has a supply agreement for cardio-vascular and oncology bulk drugs with Geneva Pharmaceuticals, the US-based off-patent drugs arm of Swiss multinational, Novartis AG.

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