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Cipla to sell factory stake

Johannesburg - Pharmaceutical company Cipla Medpro South Africa [JSE:CMP] has announced plans to sell part of a loss-making manufacturing division to its long-term partner Cipla India. 

Releasing interim results for the six months to June 2010 on Tuesday, Cipla Medpro said it would sell 25% of shareholding to the Indian company in a bid to increase volumes. 
   
"We are cognisant of the need to increase volume at CMM and as such we are extremely excited to announce that we are in the process of finalising an agreement with Cipla India, in terms of which Cipla India will acquire a 25% shareholding in CMM for a nominal value," Cipla Medpro said.

Pursuant to this, Cipla India will provide additional volume and assist Cipla Medpro in achieving World Health Organisation and Food and Drug Administration manufacturing approvals in the near future, resulting in increased orders and business for our factory, the company said.

"This will ensure better continuity, increased capacity utilisation and further entrench the relationship with Cipla India," said Cipla.

The manufacturing facility produces brands for Cipla - Laxette, Pynmed, AlkaFizz, Gastrolyte, Efavirenz and Abflex - as well as for third parties.

The division has been struggling with orders, but when delivering annual results earlier this year Cipla Medpro had raised hopes that volumes would increase as its relationship with third parties grows.
 
Cipla Medpro has been restructuring the manufacturing division, investing over R225m in its Durban-based plant and putting up sophisticated equipment, but the outcomes of the restructuring exercise have been scant.  

The group reported a 56% increase in its first-half diluted headline earnings per share to 24.4 cents from 15.6c previously. Revenue was 29% up at R714.3m from R555.4m.

 - Fin24.com
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