Albany Molecular Research, Inc. (AMRI) has signed anagreement to acquire two pharmaceutical manufacturing sites, along with additional land for future expansion, in Aurangabad and Navi Mumbai, India. AMRI will acquire the assets — including facilities, employees, products and equipment– of Ariane Orgachem Pvt. Ltd. in Aurangabad and Ferico Laboratories Ltd. in Navi Mumbai for approximately $11 million in cash. In fiscal 2006, the assets generated around $5 million in revenue.

All of the facilities are currently owned by the Runwal Group and manufacture a range of pharmaceutical intermediates and bulk active ingredients, including treatments for diabetes, heart disease and asthma. As part of the purchase, AMRI will obtain additional land in Aurangabad and plans to invest approximately $15 million to expand capabilities there during the next three years. The proposed expansion includes increasing capacity, as well as bringing these facilities into compliance with FDA regulations for manufacturing clinical trial materials and commercial drug substances.

AMRI chairman, president and chief executive officer Thomas E. D’Ambra, Ph.D., remarked, “Initially, the purchase of these sites augments and provides a reliable and cost-effective supply chain for AMRI’s U.S.-based manufacturing operations. It offers us the flexibility to produce raw materials and process intermediates to support our Rensselaer, NY plant. Longer-term, as we increase capabilities in India, we expect to leverage AMRI’s small-scale / development resources on two continents, including our laboratory operations in Hyderabad, India.”

He added, “This announcement culminates a multi-year search. Just as we have expanded our lab scale operations to include global facilities operating in a range of lower cost structure environments, we have continued to believe that globalization of our manufacturing operations was also critical to the survival and growth of this component. During our search for this facility, we evaluated a range of options, from large volume, existing large revenue-based operations, to several greenfield sites. While the purchase announced today is small in comparison to some of the options we evaluated, it gives us an immediate presence and base we can capitalize and build on; something that a greenfield location would have taken years to achieve. I am confident that, long term, this expansion of our business will provide our customers with increasing options and solutions, provide our business the opportunity to accelerate our future growth and expand our global market, and provide our shareholders increasing returns as AMRI becomes a larger, more successful competitor on the world stage.”

“As we invest in additional capacity and ramp up production, we expect these facilities to add significantly to our Large Scale
Manufacturing contract revenue in future years,” noted AMRI chief financial officer Mark T. Frost. “Ultimately, we expect to realize cost savings resulting from re-engineering our supply chain operations. That cost savings will be used to improve competitiveness and productivity in our Large Scale Manufacturing business component.”

The size of the facilities, including both the Aurangabad and Navi Mumbai sites, is more than 9,100 square meters, with additional land available for expansion. To ensure a smooth transition, AMRI has established an integration team and plans to continue the employment of the approximately 200 people working at the facilities. Harold Meckler, Ph.D., vice president of science, technology and support services at AMRI, will lead the integration effort during the transition process.

The transaction is expected to close during the second or third quarter of 2007.