Integrated manufacturer and exporter of finished pharmaceutical dosage forms, Strides Arcolabs has acquired a 17.7-per cent stake in the fourth largest Australian pharmaceutical company Genepharm Australasia, taking its stake in the ASX-listed company to 19.8 per cent.

Strides acquired the stake from a group of shareholders based in Cyprus and associated with Genepharm's largest shareholder, Genepharm Asia Pacific Enterprises Ltd.

Strides will vend its Australian and Asian business under Genepharm in exchange for issue of shares in Genepharm, subject to shareholder approval. Asia and Australia are key focus markets for Strides and are amongst the faster growing regions for the company.

The vending in of the Strides Asian business under the Genepharm Transaction will
result in Strides acquiring an additional 44 per cent of the expanded capital in Genepharm.

"We expect that Genepharm's sales and marketing expertise will help accelerate the growth of the Australian and Asian businesses," said Arun Kumar, vice chairman and managing director of Strides. "Combined with Strides' manufacturing strength and product offering, we are confident that this will prove to be a successful partnership that will create value for the shareholders in both companies."

Genepharm and Strides have also agreed to the payment of a A$500,000 break fee by the relevant party in the event that the Genepharm Transaction does not complete because of the occurrence of certain events, including the recommendation by either the Strides or the Genepharm board of a competing proposal.

No break fee is payable if the acquisition does not complete due to, amongst other things, the Directors of either Genepharm or Strides resolving not to approve execution of the relevant transaction documents, Strides not obtaining FIRB approval, or Genepharm not obtaining shareholder approval or not obtaining an opinion from an independent expert that the Genepharm Transaction is fair and reasonable.

Strides' businesses in Australia and Asia are involved in the manufacture and distribution of pharmaceutical prescription and over the counter products across the region, with sales in Singapore, Malaysia, Thailand, Vietnam, Hong Kong and Australia.

Strides has valued the Australian business at $A65 million and forecast a revenue of $A32.5 million in FYO8 for its Asian businesses. The combined regional businesses are expected to have revenues of approximately $A100 million on closing of the Genepharm Transaction.

"Over the last few years, Genepharm has established itself as one of the leading generic pharmaceutical companies in Australia. Its focus on serving its customers has enabled it to capture significant market share within a relatively short period of time."

Strides businesses in Asia includes the Singapore-based Drug Houses of Australia (Asia) Pte Ltd, which consists of regional sales and marketing capability as well as a manufacturing facility in Jurong, Singapore. This company will become the Asian hub for Genepharm's Asian operation.

Genepharm's business in Australia is involved in the sales and distribution of a broad range of pharmaceutical and OTC products in the Australian market. Genepharm services pharmacies, hospitals, medical centres and wholesalers and has an estimated market share of 11 per cent in the markets in which it operates and for the financial year ended June 2007 reported revenues of $A55 million and an underlying EBITDA of A$5 million. The Company expects strong growth for the year ending June 30, 2008.