UK's Johnson Matthey to pick up 49% stake in Dr Reddy's subsidiary

New Delhi, May 22 (UNI) UK-based drug major Johnson Matthey (JM) is planning to foray into India's highly controlled narcotic drugs segment by picking up 49 per cent stake in Dr Reddy's Laboratories subsidiary firm Macred India Pvt Ltd.

The compay has sent a proposal to the government for Foreign Direct Investment (FDI) of up to 49 per cent in Macred India, official sources said.

The proposal is likely to be considered by the Foreign Investment Promotion Board (FIPB) at its next meeting soon.

The 4.2-billion dollar JM is likely to invest in the joint venture through its Dutch subsidiary Matthey Finance BV, either by subscription to fresh shares or purchase of existing shares of Macred India from Dr Reddy's or both, the sources said without disclosing the quantum of investments to be made.

This JV will produce ingredients for the various pain killers and sedatives.

Hyderabad-based Dr Reddy's, which is allowed to produce opium derivatives like morphine, will use technology from the British giant to derive controlled substances such as morphine, codeine, dionine and thebaine from opium.

The JM Group, which controls about a third of the world market in bulk opiates, provides technology to only those companies in which it could get a substantial stake.

JM has the capacity to meet 31 per cent of the world's morphine demand and 29 per cent of the world's codeine requirement.

The production and supply of narcotic drugs used in palliative care are highly regulated as they are habit-forming and are prone to abuse.

However, the government has allowed the private sector to participate in the down stream manufacturing processes in a limited way only recently.

UNI MP SR DB1819