Granules India to exit from Chinese JV Granules Biocause

Granules India formed the Chinese joint venture, Granules Biocause Pharmaceuticals in 2007 to ensure a regular supply of ibuprofen API to support its requirements for manufacturing Pharmaceutical Formulation intermediates and Finished Dosages.

Hyderabad: Granules India Ltd recently said that it will divest its entire equity shareholding in its Chinese joint venture Granules Biocause Pharmaceuticals.

In a BSE filing, Granules India announced its intention to divest its entire equity shareholding in Granules Biocause Pharmaceuticals by selling its stake to joint venture partner, Granules Biocause Pharmaceuticals, is an equal joint venture between Granules India Limited and Hubei Biocause Heiien Pharmaceutical Co Ltd. The manufacturing facility of the joint venture is in Jingmen, China.

Granules formed the JV in 2007 to ensure a regular supply of ibuprofen API to support its requirements for manufacturing Pharmaceutical Formulation intermediates and Finished Dosages.

The key reasons as quoted in the filing for exiting the JV are;

• Environmental issues have created an atmosphere of business uncertainty in China To comply with regulatory issues on pollution, Granules Biocause Pharmaceuticals‘ production facility had invested and will continue to invest substantial Capex, which is contrary to Granules India’s strategy of reducing Capex outflow and Free Cash Flow generation.


• Several existing Ibuprofen API manufacturers have expanded capacity or stated their intention to increase capacity. In addition, several companies have announced their intention to enter the ibuprofen API market, Granules believes the additional API supply will enable it to have more supply options and having a JV is not necessary to ensure ibuprofen API continuity.

Read Also: Granules India gets EIR from USFDA for Paracetamol, Metformin API manufacturing plant

"Granules have a supply agreement with the JV and ibuprofen API supply will not be impacted since the existing agreement will continue. In addition, Granules has several other reliable approved suppliers of ibuprofen API in the international and domestic market," the company said

"Granules India’s decision to dilute the stake of this JV will not impact its commitment of achieving the profitability target provided for the year even without any additional JV’s contribution in the consolidated Net Profit. Further, the sale proceeds from this transaction will enable Granules India’s Cash position and will eventually reduce the Net Debt position," the company added.

Read Also: Granules India to sell entire stake in Granules OmniChem to JV Ajinomoto