JB Chemicals Sells Russian-CIS Portfolios To Focus On Domestic Market

BMI View: We view Indian drugmaker JB Chemicals & Pharmaceuticals (JBCPL)'s strategy - to sell its Russian and Commonwealth of Independent States (CIS) over-the-counter (OTC) brands and prescription drug subsidiaries, while establishing manufacturing supply contracts with the acquisition companies - favourably. JBCPL will remain exposed to the Russian-CIS high growth markets, while limiting its resource outlay on maintaining branded products in a rapidly expanding, but increasingly competitive market. The larger and substantially better-resourced acquisition companies, Dr. Reddy's Laboratories and Johnson & Johnson (J&J), will be able to advance the branded products in Russia and CIS more successfully than JBCPL could hope to. Furthermore, the move will also allow JBCPL to focus on its domestic market. BMI notes that the agreement may represent a consolation prize for Dr Reddy's as it had originally bid for substantially larger OTC businesses, but lost out to Johnson & Johnson.

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