Matrix Laboratories Limited is pleased to announce its decision to acquire controlling stake in Concord Biotech Limited, an Ahmedabad-based biotechnology company with fermentation & Bio-catalytic technology capabilities and US FDA approved API manufacturing facilities. The company has signed a term sheet to this effect with the promoters of the closely-held Concord Biotech at Hyderabad.

As per the term sheet executed, Matrix would acquire 55 per cent stake in Concord Biotech through a combination of purchasing of existing equity shares from the promoters and other shareholders of the company and subscribing to the new equity shares to be issued by Concord Biotech on preferential basis. Mr. Sudhir Vaid, the main promoter and the Managing Director of Concord Biotech, and his associates will continue to hold 29% stake in the company. Other existing shareholders will hold 16% stake.

As per the understanding, Mr. Sudhir Vaid and his team will continue to spearhead the operations of the company under the guidance of the Board in which Matrix will have majority representation. Concord Biotech has posted a net profit of Rs. 2 crore on a sales turnover of Rs. 15 crore for FY 05, and is poised to achieve significant growth in the near future.

Promoted by Mr. Sudhir Vaid, a biotechnologist with 29 years of experience, Concord Biotech started its operations in April 2000 by acquiring the manufacturing facility from DSM and expanding into R&D and manufacturing facilities for Bio-tech based APIs. The manufacturing and R&D facilities of the company are located at Dholka, near Ahmedabad in Gujarat. Concord’s manufacturing facilities is one of the few Bio-tech plants in India that have been approved by the US FDA.

Using its expertise in the field of Biotechnology and chemistry, Concord Biotech is concentrating on the fermentation-based Active Pharmaceutical Ingredients covering segments such as lipid-lowering, immunosuppressants and enzymes. The existing product basket of the company consists of Lovastatin, Pravastatin, Simvastatin, Tacrolimus, Mycophenolate Mofetil, Cyclosporin and Penicillin-G Amidase enzyme and there is no overlap with that of Matrix.

Concord has filed Drug Master Files (DMF) for Lovastatin, Simvastatin and Tacrolimus with the US FDA. Dossiers for obtaining Certificate of Suitability (COS) for these three products have also been filed with the European Department for Quality Medicines (EDQM). DMFs for Mycophenolate Mofetil and Pravastatin will be filed in the next quarter.

Mr. Sudhir Vaid has successfully demonstrated and transferred commercial scale fermentation-based technologies to some of the leading biotech companies in India and abroad, prior to promoting Concord. Concord Biotech has the capacity and flexibility to ferment and develop processes involving a variety of microbial organisms and then successfully scale-up to commercial scale with dedicated manufacturing facilities for Statins, immunosuppressants and enzymes.

Concord Biotech is the largest producer of Penicillin-G Amidase enzyme and is exporting this enzyme to a number of companies in China, Europe, and USA, besides having major market share in India. It has a very large shake flask capacity in India, wherein the wild strains can be manipulated by conventional mutation programs.

Explaining the strategic rationale for acquiring controlling stake in Concord Biotech, Mr. N. Prasad, the Executive Chairman of Matrix Laboratories, said: “Our investment in Concord Biotech is in line with our strategic intent to acquire fermentation technology and manufacturing capabilities. This is a key step in the evolution of Matrix and this has come in at a time, when the major fermentation based products are going off-patent in the international markets. This investment will add Statins, enzymes and immunosuppressants to our product portfolio and hence widen the range of products offered to Matrix’s customers”.

“We are extremely happy to be associated with Matrix laboratories. Our association with Matrix will help in reaching major international pharmaceutical companies with our products. Under the visionary leadership and guidance of the Matrix Laboratories’ management, Concord Biotech will play a vital role in establishing as a major player in the fermentation technology-based products globally,” said Mr. Sudhir Vaid, the promoter and the Managing Director of Concord Biotech.

The acquisition of controlling stake in Concord Biotech will add to the technology and manufacturing strengths of Matrix Laboratories and Matrix will be able to fully utilize the market potential of the fermentation technology-based products of Concord, by leveraging its strong customer base and marketing strengths in the global generic markets.

The acquisition will have synergistic benefits in terms of providing API support to some of the existing and pipeline products of Docpharma, Belgium (which is now fully owned by Matrix Laboratories), particularly for lipid lowering and immunosuppressant products.

The acquisition will also play a meaningful role in executing the overall business strategy of Matrix Laboratories in proactively de-risking its business in terms of product segments.

The acquisition of new technology and manufacturing capabilities through Concord Biotech will expand the scope of the Contract Research & Manufacturing Services (CRAM) business segment of the company. Concord also undertakes Custom Synthesis projects in biotechnology area.

The commitment shown by Mr. Sudhir Vaid and his team for the company post acquisition of controlling stake by Matrix will add to the management depth of Matrix Group. Matrix and Concord have agreed upon for entering into a management contract for key personnel of Concord for a period of five years. In addition, Mr. Sudhir Vaid would also enter into a non-compete agreement with Matrix for three years, which would commence after the completion of the period of the management contract.

Overall, the acquisition will have incremental positive impact on the earnings potential of Matrix, besides providing several other indirect advantages.

Matrix Laboratories Limited is a public limited company listed on BSE and NSE, and is engaged in the manufacture of Active Pharmaceutical Ingredients (APIs) and Solid Oral Dosage Forms. Matrix is one of the fastest growing API manufacturers in India and focuses on regulated markets such as US and EU.

>The company has a wide range of products in CNS, anti-bacterial, anti-AIDS, anti-asthmatic, cardiovascular, gastro intestinal, anti-fungal, pain management and life style related therapeutic segments. Four API manufacturing facilities of the company are approved by the US FDA. The combined FDA approved capacity of the company is one of the largest in the country. The company's Finished Dosage Forms (FDF)

manufacturing facility has a capacity to manufacture 2 billion tablets and 300 million capsules on two- shift basis.

With about 2300 employees, including over 300 R&D scientists, Matrix focuses on developing APIs with non-infringing processes to associate with generic players in regulated markets for their early formulation entry.

For the financial year ended 31st March 2005, Matrix reported a profit after tax (PAT) of US $ 30 million on sales of US $ 146 million. It has recently acquired Docpharma, Belgium, for a front-end presence in Southern Europe. Newbridge Capital/TPG Ventures, US, and Temasek Holdings, Singapore, are the strategic investors in Matrix with combined holding of about 40 per cent.