Mylan Labs Ups Stake in China Subsidiary

Matrix Laboratories of India has increased its ownership of the China-based Mchem group of companies, which produces intermediates, active pharmaceutical ingredients and finished dose products. In 2005, Matrix bought a 60% stake in Mchem, but it will now bring its ownership to 97%. In 2005, at the time of the Matrix purchase, Mchem was described as having $35 million in annual revenues.

This story gets more complicated. In August 2006, Mylan Labs (MYL) paid $736 million to acquire a 71.5% stake in the parent, Matrix Labs, which is listed on the Bombay exchange. Like Mchem, Matrix is involved in the intermediates, API, finished dose business, and is one of the companies that supplies anti-retroviral APIs for generic HIV/AIDS drugs. In its fiscal 2006, Matrix produced a profit of $45 million on $262 million of revenue.

Matrix was attractive to Mylan both because of its low-cost ingredients for drugs, but also because of its distribution network in Europe, Asia and Africa.

Mchem added some distribution in China to Matrix, a factor cited in the initial purchase of Mchem. Also, both Matrix and Mchem are involved in anti-HIV/AIDS drugs.

After the Mylan merger, Matrix has continued to trade on the Bombay exchange, and it is considered an independent company. Its Chairman, Sri N. Prasad, continues to hold a 5% stake in the company.

As a side note, one of the companies from whom Mylan bought its interest in Matrix was Newbridge Capital, which is made up of Texas Pacific Group and Blum Capital. Texas Pacific Group made a splash earlier this year when it made a $30 million investment in China CRO ChemPharma.

Disclosure: none.