Lyka Labs, Hetro Drugs JV gets approval

By Praveen Chandran | 25 Feb 2002

Mumbai: The board of directors of the Mumbai-based Lyka Laboratories has approved a joint venture between the company and the Hyderabad-based Hetro Drugs. The joint venture will market and distribute Lyka’s brands in India and also introduce new products. Lyka will hold 49 per cent in the venture, while Hetro will hold the rest.

Lyka’s formulations business of about Rs 65 crore, including brands like antibiotics Ampilin, Arbid and Spartin, will be transferred to the new company. Lyka will get Rs 49.8 crore as a consideration for this transfer. In addition to this, it will also get a royalty of 4 per cent of the net sales of the joint venture for the next three years. The new company will have a paid-up equity capital of Rs 20 crore.

Lyka will be left with its export business of about Rs 60 crore. Hetro Drugs is a contract manufacturer of bulk drug for leading players like Alkem, Cadila and Cipla. Lyka chairman and managing director N I Gandhi says Hetro’s expertise in supporting the launch of new products by major companies will help grow Lyka’s formulations business that is currently dominated by old brands.

Hetro Drugs director Dharmesh Shah says since Hetro has no stake in the formulations business, Lyka’s brand provides the mass distribution and reputation with the medical fraternity to get a foothold in the market.

About two years back, Lyka Labs sold its two flagship brands — Sensur and Alex — to Glenmark Pharmaceutical for a consideration of around Rs 38 crore. The exports of the company were severely hit due to the disintegration of the USSR. The erstwhile USSR was Lyka Lab’s major export destination. It is considered that the company still has to get around Rs 6 crore from the Russian market.