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Unichem Laboratories to Build Drug Factory, May Buy Brands to Boost Growth

Unichem Laboratories Ltd., an Indian maker of antibiotics and pain killers, plans to build a factory and may acquire companies or brands to expand its product range.

The company will spend 600 million rupees ($13 million) to build a factory in the central Indian city of Indore to make cardiovascular and pain relief drugs for the U.S. market, said Gundu Rao, executive vice president of corporate affairs, in an interview in Mumbai today. An additional 400 million rupees will be used to expand a research facility in Goa state, he said.

Unichem will hire 700 medical representatives in India, where it generates almost 75 percent of revenue, to expand its domestic sales force to 2,500 within the next two years, Rao said. The Mumbai-based company plans to start selling at least seven drugs in the U.S. this fiscal year, including a newly approved high-blood pressure treatment, to expand its offering in the world’s largest pharmaceutical market.

The company’s growth this year would “be higher than the markets growth,” Rao said. The company expects to sell as much as $5 million of drugs in the U.S. this year, he said.

Unichem rose 2.5 percent to 443.8 rupees at the 3:30 p.m. close in Mumbai, boosting its market value to 16 billion rupees. The shares have advanced 37 percent this year, beating the 3.7 percent gain for India’s benchmark Sensitive Index.

Gynecology

In the Indian market, the company plans to start selling drugs to treat eye diseases and gynecological conditions and is looking to spend as much as 3 billion rupees for acquisitions.

“We are looking for either a small business acquisition or a brand acquisition in this space,” said Rao, who was formerly finance director at Pfizer Ltd. in India before joining Unichem in 2007.

Unichem has six factories, two producing raw materials for medicines and four making finished products, according to its website.

The Indore plant is expected to produce tablets and capsules for export and start operations in 2013. The facility in Goa will be used for research into monoclonal antibodies, which are bioengineered molecules that mimic the action of the body’s own response to infections, Rao said.

Rao said that the company is open to collaborations in the form of co-marketing deals, contract manufacturing or contract research. Unichem has not been approached regarding a possible takeover of the company, the executive said.

“We would continue to operate as an independent company and we are not up for any sale,” Rao said.

Batlivala & Karani Securities India Pvt. said in a June 16 report that Unichem received several proposals by overseas pharmaceutical companies and a tie-up may be announced in one to two months. Unichem Chairman and Managing Director Prakash Mody declined to comment at that time.

The Batlivala report came about one month after Abbott Laboratories agreed to buy Piramal Healthcare Ltd.’s branded generic-medicine unit in India for $3.72 billion.

To contact the reporter on this story: Adi Narayan in Mumbai at anarayan8@bloomberg.net

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