Bloomberg News

Strides Expects U.S. Drug Supply Deal Within Weeks

March 02, 2012

Strides Arcolab Ltd. (STR), a Pfizer Inc. (PFE) drug supplier, said it expects an agreement in two to three weeks to provide injectable medicines amid a supply shortage at U.S. hospitals.

The company’s partners are in talks with a so-called group purchasing organization in the U.S. on the number of drugs to be supplied and are very close to a long-term agreement, Chief Executive Officer Arun Kumar said in an interview at Strides’s headquarters in Bangalore, India. He declined to identify the organization and medicines for the contract.

Manufacturing problems at Lake Forest, Illinois-based Hospira Inc. (HSP) and German drugmaker Boehringer Ingelheim GmbH have created an opportunity for Strides to expand its share of the injectable drugs market, where competition is limited, according to Systematix Shares & Stocks Ltd. A bulk-purchase order would boost Strides’s revenue because more than 75 percent of medicines bought by U.S. hospitals are through such groups, Surya Narayan Patra, a Systematix analyst, said.

“Strides is at the right place at the right time and I’m quite bullish on the injectables story,” Patra, who recommends buying Strides shares, said by telephone from Mumbai. “They have the money to grow the business and this shortage will help gain market share.”

Group purchasing organizations negotiate favorable terms on drugs and medical supplies for their customers, which include hospitals.

Longer Deals

“We are now in a position not only to offer products that are in short supply, but also negotiate long-term contracts,” Kumar said yesterday.

Strides rose 0.4 percent to 549.20 rupees at close in Mumbai. The stock has soared 53 percent in the last 12 months, the biggest gainer among the 19 members of India’s BSE India Healthcare Index. (BSETHC)

The company currently sells its drugs in the U.S. through New York-based Pfizer and Sagent Pharmaceuticals Inc. of Schaumburg, Illinois. Strides in May 2010 agreed to supply injectable medicines and as many as 38 generic cancer drugs to Pfizer. That followed an agreement in October 2007 with Sagent for injectable drugs.

To contact the reporter on this story: Adi Narayan in Mumbai at anarayan8@bloomberg.net

To contact the editor responsible for this story: Jason Gale at j.gale@bloomberg.net


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