Granules India Ltd. has decided to divest its entire equity shareholding in its Chinese joint venture, Granules Biocause Pharmaceuticals. The latter is an equal joint venture between Granules India and Hubei Biocause Heilen Pharmaceutical, with manufacturing facility at Jingmen in China. The company took this decision as environmental issues have created an atmosphere of business uncertainty in China. To comply with regulatory issues on pollution, Granules Biocause Pharmaceuticals’ production facility had invested, and will continue to invest substantial capital expenditure (CapEx), which is contrary to Granules India’s strategy of reducing CapEx outflow and free cash-flow generation.
The company believes that the additional API supply will enable it to have more supply options, and having a joint venture is not necessary to ensure Ibuprofen API continuity.
Besides, many companies have announced their intention to enter the Ibuprofen API market. Granules has a supply agreement with the joint venture and Ibuprofen API supply will not be impacted as the existing agreement will continue. In addition, Granules has several other reliable approved suppliers of Ibuprofen API in the international and domestic market.