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Torrent exits JV with Sanofi-Synthelabo

Torrent Pharmaceuticals Ltd said on Wednesday it had reached an agreement with French firm Sanofi-Synthelabo to sell its 50 per cent stake in an equal joint venture along with domestic rights for a key anti-epileptic drug for $13.06 million.

Torrent, a medium-size Indian drug firm, will receive $5.31 million for its 50 per cent stake in Sanofi Torrent India Ltd, the joint venture company formed five years ago, a company statement said.

It said Sanofi would also pay the company based in Ahmedabad $7.75 million for transfer of trademark and related know-how for the anti-epileptic drug, Valparin.

However, Torrent will retain the right to use the brand in the overseas market.

STIL was jointly producing and marketing a basket of drugs pooled from both companies, mainly in the cardiovascular and neuro-psychiatric segments.

"In view of significant ongoing changes in India's pharmaceutical industry, it was felt by both partners that the joint venture may not fit their future strategies," a company statement said.

Torrent said the deal would boost the company's profit in the financial year ending March, but part of it would be offset by a provision of Rs 404.5 million in the quarter ending December for losses from investment in associate company, Torrent Gujarat Biotech Ltd.

Torrent will use the money generated from the deal to increase its presence in the domestic and export market.

Torrent said its decision to sell Valparin would have no material impact on its financial performance in the current financial year ending March.

The statement said Torrent would continue to manufacture STIL products and extend service support to Sanofi in the next two years for a smooth transition.

Torrent has also agreed to place Rs 97 million in a rupee escrow account for the next two years to provide for any liability that arises before the completion of the transaction.

Torrent shares closed 10.47 per cent higher at Rs 182.40 on Wednesday, while the benchmark 30-share Bombay index ended down 0.44 per cent.

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