Avesthagen forms joint venture with Chilean firm

March 20th, 2009 - 7:37 pm ICT by IANS  

Chennai, March 20 (IANS) Bangalore-based biotech company Avesthagen Ltd has signed a joint venture agreement with Uxmal SA of Chile to promote research and development (R&D) of bioactives, a top official said here Friday.
The joint venture, Avesthagen Latam, will be funded through a mix of equity and a Chilean government grant, Avesthagen chairperson and managing director Villoo Morawala Patel said.

“The first-year investment need will be $3.8 million, of which 40 percent is expected as grant,” she said.

The Indian company will hold 75 percent holding in the Santiago-based new entity, while the rest will be with Uxmal.

According to Manuel Gidekel, managing director of Uxmal, the joint venture will promote bioactive ingredients for commercialisation and its use in functional foods, healthcare products and cosmetics.

Avesthagen had earlier plans to expand its operations beyond R&D activities. However, those plans were put on hold as the market sentiments were negative, Patel said.

“Planning a Rs.6-billion initial public offering (IPO) we thought of doing everything in-house - developing molecules, manufacturing and marketing of the products,” she said, adding that those plans were postponed as the IPO plan did not take off.

She said the company needs around Rs.1.4 billion to proceed ahead with its business plans and the funds will be raised through a mix of licensing, sale of molecules and manufacturing.

The changed business circumstance has forced the company to drastically downsize from 700 to 450 people.

Patel added that the Chilean joint venture will be allowed to market three of the company’s bioactive molecules in the Latin American country.

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