Neopharma plans $100m plus drug plant in Abu Dhabi

Neopharma plans $100m plus drug plant in Abu Dhabi

If it goes ahead, this would be BR Shetty owned company’s second in the emirate

The Dr. B.R. Shetty-owned Neopharma has confirmed feasibility plans for a second production facility in Abu Dhabi, at an estimated cost of $100 million plus. Additional land has been acquired at the Kizad industrial zone in the emirate, raising the total to 160,000 square metres for both facilities. (Shetty owns a 90 per cent stake in Neopharma.)

It follows Neopharma’s recent acquisition of a pharma factory in Japan, as well as the technical know-how to produce the “NatuALA” pre-diabetes dietary supplement. The company is currently in the midst of clinical trials in the US to get NatuALA approved for the management of Type 2 diabetes.

Neopharma plans $100m plus drug plant in Abu Dhabi

Neopharma plans $100m plus drug plant in Abu Dhabi

The health care sector in the UAE has seen a robust deal flow in recent years, with the big operators going in for big-ticket acquisitions to raise hospital bed capacities as well as bring about consolidation among clinics and primary health care providers.

But Neopharma’s push into value-added drugs — and not just of the generic variety — brings about a qualitative change on the pharmaceutical side of the local health care industry. The company is also working on a possible generic drug production facility in Saudi Arabia. Neopharma was set up in 2003.

But it is the know-how from the Japanese acquisition that will come most handy. Once an approval is forthcoming, the NatuALA drug will have extreme potential not just in the US but elsewhere as well, said Shetty. (The company is also pushing the drug’s diagnostic and therapeutic credentials in oncology.) “The “fermentation” technology the Japanese plant uses is a gamechanger and we would like to capitalise on this opportunity,” said Shetty, who is also the founder of NMC Health and currently its joint Non-executive Chairman. “Sure, Neopharma at its launch was primarily manufacturing generic/bulk drugs, but I am now seeing possibilities to do much more.

“We had an offer from Japan’s Cosmo Oil Co. (which owned the pharma company Cosmo ALA) to take over the plant in Japan. We agreed as it was an ideal project with the fermentation technology that we were looking for.”

While Neopharma now owns 100 per cent owner of the plant, it’s Japan exposure also extends to a 65 per cent in Cosmo ALA (now renamed Neo ALA).

The plant was bought for Dh100 million, while Dh265 million was spent on the acquisition of patents and licenses. An additional Dh515 million will go into clinical studies.

Much depends on how quickly the product — NatuALA — is able to make the transition from being an over-the-counter dietary supplement to a full-fledged drug. For this, the US Federal Drug Administration (FDA) needs to give its approval, and thereafter it is just a matter of time before other health authorities do the same.

Approximately one million people in the UAE suffer diabetes and nearly 450,000 are estimated to be undiagnosed cases.

“I don’t think I paid a high premium for the Japanese know-how and manufacturing assets,” said Shetty. “Diabetes, heart-related and cancer are killer diseases and close to 40 per cent in the UAE are diabetic and the numbers are rising.

“NMC Health PLC is listed on the London Stock Exchange and is one of the UAE’s largest private health care providers with over 4 million treated every year. We are proud to be the only company to be so successful on the FTSE 250. It is now trading at 24 (21.86 as of June 30), which is almost a 12-time multiple for investors.

“I currently own 90 per cent in Neopharma and believe that Neopharma will chart an even better strategic route. Neopharma has already started making profits and we want to grow the company further before we decide to get listed. Right now, the year 2020 is the target for getting listed on FTSE.”