Citi Pharma’s JV to boost local drug production
photo: file
Citi Pharma Limited, the leading manufacturer of Paracetamol in Pakistan, has announced its venture into a joint partnership with a renowned Chinese firm. The objective is to locally produce 30 ingredients for medicines, aiming to reduce imports by approximately Rs10-15 billion annually.
The company plans to establish a new production line, with an estimated investment ranging from Rs15-20 billion, in collaboration with Hangzhou Newsea Technology Co Ltd. Commercial production of these pharmaceutical ingredients is expected to commence within the next 12-18 months, as projected by a local research firm.
In a notification to the Pakistan Stock Exchange (PSX) on Tuesday, Citi Pharma revealed that the joint venture, named Etaci Limited (Public Limited Company), will primarily focus on manufacturing the remaining portion of APIs not currently produced by Citi Pharma Limited. This strategic move is part of the company’s ongoing commitment to expanding its product portfolio.
Citi Pharma currently manufactures approximately 20 to 22 APIs to meet various medical needs. However, acknowledging the evolving healthcare landscape and the growing demand for diverse pharmaceutical products, the company aims to enhance its product range. Through the proposed joint venture with Hangzhou Newsea Technology Co Ltd, “Citi Pharma Limited plans to manufacture an additional 30 APIs, effectively expanding its range of offerings.”
Topline Research’s Deputy Head, Sunny Kumar stated in a commentary that the management of Citi Pharma revealed plans to set up another plant, expected to be operational within the next 6-8 months, with commercial operations slated to begin in the subsequent 12-18 months. The total CAPEX (capital expenditure/cost) for the project, estimated at Rs15-20 billion, will be financed through a combination of debt and equity, he added.
Under the legal structure of Etaci Limited, Citi Pharma Limited will retain a controlling interest of 65%, with Hangzhou Newsea Technology Co holding the remaining 35%. This collaboration aims to decrease reliance on imported products, thus enhancing cost efficiency, supply chain resilience, and reducing the import bill.
“This joint venture is expected to generate an annual turnover of more than Rs15 billion, with a projected cost of sale around Rs10.50 billion, resulting in a gross profit of Rs4.50 billion,” stated the notification.
Moreover, the joint venture is anticipated to benefit from Citi Pharma Limited’s existing infrastructure and resources, thereby minimising operating costs and streamlining production processes, ultimately leading to higher net profit margins.
Through this partnership, the company aims to leverage its collaborator’s expertise and resources while capitalising on emerging opportunities in the pharmaceutical landscape. This collaboration brings together Citi Pharma Limited’s API manufacturing proficiency with Hangzhou Newsea Technology Co Ltd’s technological capabilities, fostering innovation and efficiency in API production.
The Citi notification further reads that the decision to pursue this joint venture underscores the company’s proactive approach toward sustainable growth and technology transfer to Pakistan. It aligns with Citi Pharma Limited’s commitment to innovation and growth in the pharmaceutical industry, aiming to meet evolving healthcare needs while contributing to Pakistan’s economic development.
Furthermore, this joint venture aligns with the company’s vision for 2030, aiming to cultivate self-reliance and contribute to the national economy by producing essential API materials within Pakistan.
Published in The Express Tribune, May 8th, 2024.
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