CIPLA Medpro SA (CMSA) intended turning loss-making Cipla Manufacturing around and believed the involvement of Cipla India as a shareholder in the business would help it achieve this, Jerome Smith, the group chief executive, said yesterday.
For the past three years, Cipla Manufacturing has made losses. In 2008, loss before tax was R13.5 million, this rose to R37.2m last year. For the first half of this year, the loss has been R32.9m.
Smith said by selling a 25 percent stake of the subsidiary to the Indian firm, Cipla would not only cement relations, but would also have access to Cipla India's technology and skills.
"They will help us with capacity, get this place up and running. We have lost money here and we want to change that as quickly as possible. The synergy is huge," said Smith.
The plant now has an annual capacity of 2 billion tablets and capsules, 19.4 million blister strips, 20.7 million foil strips, 200 000 kilograms of powders and 15 million sachets. This is four times greater than the capacity that was available before the R329m upgrade.
Smith said Cipla had been losing money because it did not have enough capacity. He said the more manufacturing it did, the better the business would be.
The value of the shareholding to be taken up by Cipla India has not been decided. Yesterday, CMSA together with President Jacob Zuma officially launched Cipla Manufacturing, which had had an upgrade over the past three years.
Smith said Cipla planned to have the World Health Organisation and US's Food and Drug Administration accreditation for the plant within a year.
The firm is planning to manufacture more of its products from the plant and is already producing Aids drugs, Lamovidin for the government and Efavirenz for the private sector. CMSA has submitted a bid for the new antiretroviral tender.
Smith said he was confident Cipla prices were competitive and that it would manufacture the bulk of what it would be awarded at the plant.
"We want to do as much as we can here (at Cipla Manufacturing) and since Cipla India will be sharing in the profit, I don't think they will mind if we manufactured here."
Meanwhile, CMSA is working on expanding into Africa, specifically Nigeria and Uganda.
CMSA shares added 3.53 percent at R6.74 on the JSE.