India’s Dr. Reddy's Laboratories has entered a definitive agreement to sell its API manufacturing business unit at Jeedimetla, Hyderabad, to Therapiva Private Ltd, an emerging generics pharmaceutical company headquartered in Abu Dhabi, United Arab Emirates.

The deal is being structured as a slump sale (as a going concern) and includes all related fixed assets (land and building), current assets, current liabilities and its employees. The two facilities for which Dr Reddy’s received an FDA warning letter last year are not part of the transaction.

Sanjay Sharma, executive vice president and head of Global Manufacturing Operations at Dr. Reddy’s, said the divestment of the API business is a step toward streamlining the Indian company’s manufacturing operation to optimize cost structures.

Therapiva is a joint venture between Omnicare Drugs India (a 100% subsidiary of Neopharma Abu Dhabi) and Laxai Life Sciences Private Ltd.

"This acquisition represents a unique opportunity to further strengthen Therapiva's position as a premier supplier of APIs,” said Vamsi Maddipatla, CEO of Therapiva and Laxai Life Sciences. He said there is “a strong cultural fit “between the two companies.

The Indian company recently signed a deal to sell its antibiotics manufacturing activities at Bristol, Tennessee, USA,  to Neopharma, as it continues to cut costs and Neopharma makes moves to strengthen its participation in the market.

A representative for Neopharma told the US trade journal Fierce Pharma that the company intends to increase the number of employees to about 50 from the current 40 by the end of next year. It also plans to expand the plant and potentially have 100 workers on the ground.

For several years, Dr. Reddy’s has seen its finances deteriorate as it has faced regulatory issues tied to its manufacturing. In late 2015, the FDA warned the company about facilities, including two API operations and a formulation plant where it makes oncology drugs.

Of particular interest to the FDA was the discovery of a secret testing lab used for years to test batches, which allowed the company to hide failed test results.