OREANDA-NEWS. January 17, 2013. Mitsui & Co., Ltd. ("Mitsui," Head Office: Tokyo, President & CEO: Masami Iijima) has acquired an additional 27.29% of the shares of the Indian pharmaceutical intermediates and active pharmaceutical ingredient CMO (*1) Arch Pharmalabs Limited ("Arch"), for INR3.7 billion (Approx. Ґ5.9 billion) on January 16, 2013. The acquisition has increased Mitsui's equity stake in Arch to 31.96% combining with its previous equity stake(*2).

Arch is a leading pharmaceutical intermediates and active pharmaceutical ingredient (API) contract manufacturer operating several manufacturing and development bases in India. Arch provides CMO services to major branded drug manufacturers in Europe and the US and manufactures and sells APIs for generic drugs to emerging countries, and continues to expand its business.

Mitsui began utilizing the services of Arch to provide CMO services to Japanese pharmaceutical manufacturers in 2005, and in 2010, acquired a 5.25% stake in Arch by subscribing to a third party allocation of its shares. By increasing its stake in Arch, Mitsui intends to reinforce the partnership with Arch and strengthen Mitsui's CMO business platform.

With the development of new drugs become increasingly difficult and ever more costly, the global pharmaceutical industry is in the throes of an environmental change with low-priced generic drugs assuming greater prominence as countries seek to reduce the cost of healthcare. Branded drug manufacturers in Europe and the US are increasingly outsourcing their operations to Asia as a means of reducing development and manufacturing costs and are particularly keen to work with CMOs in India that can offer both price competitiveness and technical capabilities. Furthermore, as demand for generic drugs grows, there is a pronounced trend among generic drug manufacturers to use CMOs in India, which has a large number of FDA and EDQM(*3) approved API plants meeting international standards for the manufacture and quality control of pharmaceuticals.

Through its partnership with Arch, Mitsui intends to take advantage of India's remarkable emergence as a major world force in pharmaceutical manufacturing by using the country as a base from which to develop its CMO business for branded drug manufacturers globally and expand contract manufacturing of APIs to meet the expected growth in demand for generic drugs in emerging countries. At the same time, Mitsui will make use of its extensive sales networks and capabilities to contribute to the stable supply of pharmaceutical products as a global business enabler active in Europe, the US and the world's emerging countries.

* 1: CMO
 CMO (contract manufacturing organization) business is a method whereby a pharmaceutical company outsources manufacturing to an outside company rather than performing it itself. A CMO is a company to which the manufacturing function is outsourced. Pharmaceutical companies are increasingly making strategic use of CMOs to reduce costs and cut back their own manufacturing bases through M&A, allowing them to concentrate their management resources on their core R&D activities.

* 2: Prior to this additional equity stake acquisition, Mitsui's equity stake decreased from 5.25% to 4.67% due to Arch Pharmalab's increasing its capital.

* 3: FDA, EDQM
 The Food and Drug Administration (FDA) is a US government agency that approves and regulates the handling of food, drugs and other consumer products. Companies intending to manufacture and sell drugs for the US market must first have their manufacturing plant inspected and approved by the FDA.
 The European Directorate for the Quality of Medicines & HealthCare (EDQM) is an organization established for the purpose of setting European quality standards for safe medicines and promoting their safe use.