Cipla has signed a pact to acquire a 6.9% stake in a China-based unit.

Established in over 80 countries, Cipla Ltd. is widely recognized for manufacturing affordable, high-quality generic medications. They also conduct research and development to bring innovative treatments to market. Their objective is to make healthcare more accessible and affordable for everyone on the planet. In the pharmaceutical industry, Cipla is still a leader committed to improving world health.

Cipla Ltd. will own 100% of the Chinese JV:

On August 8, 2019, Cipla Jiangsu was founded in China as a joint venture between Jiangsu Xidi Pharmaceuticals and Cipla EU, which presently owns 93.0876% equity. On September 25, Cipla Ltd announced that Cipla (EU) Ltd, its wholly-owned subsidiary, had reached a final agreement to purchase Jiangsu Xidi Pharmaceuticals Co Ltd’s remaining 6.9124% equity interest in Cipla (Jiangsu) Pharmaceuticals Co Ltd, a Chinese company. “We would like to inform you that on September 25, 2024, Cipla (EU) Limited, the company’s wholly-owned subsidiary in the United Kingdom, entered into a definitive agreement to purchase the whole 6.9124% equity interest of Jiangsu Xidi Pharmaceuticals Co, Ltd (previously known as Jiangsu Acebright Pharmaceuticals Co, Ltd) held in Cipla (Jiangsu) Pharmaceuticals Co, Ltd, China (Cipla Jiangsu), subsidiary,” a stock exchange filing stated. After this deal closes, Cipla Jiangsu will become a fully owned step-down subsidiary of Cipla.

Strength of Cipla Ltd. in the Chinese market:

Cipla EU will gain complete control over Cipla Jiangsu as a result, enhancing its market share in China. Cipla Jiangsu is fully owned by none of the promoter group companies of Cipla. The acquisition is contingent upon approval from Chinese regulatory bodies as well as compliance with applicable laws. The agreement is anticipated to be completed by November 15, 2024, or at a later date that is mutually agreed upon, subject to the satisfaction of all regulatory requirements.

The stock of Cipla Ltd. is slightly higher today:

Cipla Ltd.’s stock is currently trading at Rs. 1644.10 per share and is expected to continue rising due to the recent developments that indicate it owns a 100% stake in Jiangsu Xidi Pharmaceuticals Co Ltd. The company is based in China and is known as Cipla (Jiangsu) Pharmaceuticals Co., Ltd.

Conclusion: The decision to acquire a 100% stake in the Chinese joint venture will improve Cipla Ltd.’s strategic positioning and manufacturing capabilities in China.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.