Sri Lanka Healthcare Investment
Zydus Lifesciences and Sunshine Healthcare Form $20M Pharma JV in Sri Lanka
Key Points
Under the share subscription and shareholders' agreement, Zydus Lifesciences will subscribe 50% of the total paid-up equity share capital of Zydus Sunshine Lifesciences Pvt Ltd for up to USD 5 million in one or more tranches.
The new joint venture company will be named Zydus Sunshine Lifesciences Pvt Ltd and its board will comprise six directors—three appointed by Zydus Lifesciences and three by Sunshine Holdings.
The manufacturing facility is planned for the Horana Export Processing Zone in Sri Lanka, reinforcing local production within a designated special economic zone.
Executive comments frame the partnership as strategically important for resilience and healthcare security: Sharvil P Patel says strong local capabilities are key to resilient healthcare ecosystems, and Shyam Sathasivam calls the tie-up a strategic investment in Sri Lanka’s healthcare security and industrial growth.
Zydus Lifesciences’ international formulations business grew nearly 40% year-on-year in FY26 to about Rs 3,070 crore, accounting for roughly 11% of the company’s pharmaceutical revenue, underscoring its push into overseas markets beyond the US.
India's Zydus Lifesciences and Sri Lanka's Sunshine Healthcare have agreed to build a $20 million pharmaceutical factory together, marking one of the largest healthcare manufacturing investments in Sri Lanka in recent years. The new joint venture, called Zydus Sunshine Lifesciences Pvt Ltd, will sit on four acres in the Horana Export Processing Zone and make medicines for Sri Lanka's retail market, according to TradingView.
The deal creates a 50/50 partnership. Zydus will put up $5 million for its half of the equity, with the full project cost topping $20 million across multiple funding rounds. A foundation stone ceremony has already taken place at the Horana site, signaling that both sides are moving fast.
How the 50/50 Deal Is Structured
Under the share subscription and shareholders' agreement, Zydus Lifesciences will own exactly 50% of Zydus Sunshine Lifesciences Pvt Ltd, according to Whalesbook. Its cash contribution is capped at $5 million, paid in one or more tranches. Sunshine Healthcare holds the other 50%. The board will have six directors — three from each side — giving both partners equal say in how the company is run.
The facility will operate inside the Horana Export Processing Zone, a Board of Investment (BOI) designated area that gives qualifying companies tax advantages. Sri Lanka's National Medicines Regulatory Authority (NMRA) sets the pricing rules the plant must follow. The NMRA is the government body that approves and regulates drugs sold in the country.
Sri Lanka Wants to Stop Importing Most of Its Medicines
Sri Lanka currently imports the vast majority of its pharmaceutical needs. The 2022 economic crisis made that painfully clear — a collapsing rupee caused drug prices to spike and shelves to go bare. The government has since pushed hard to build local manufacturing capacity and cut its reliance on foreign supply chains, according to The Machine Maker.
This JV fits squarely into that strategy. The factory is expected to produce around 500 million tablets and capsules per year once fully running. That output could reduce the foreign exchange Sri Lanka spends on drug imports by an estimated $10 million to $15 million annually. Employment is also part of the pitch — roughly 250 direct jobs and 500 more indirect jobs in the Horana area.
What Each Side Gets From the Partnership
For Zydus, the Sri Lanka move is part of a broader push beyond the United States. Its international formulations business — sales outside the US — grew nearly 40% year-on-year in FY26, reaching roughly Rs 3,070 crore (about $370 million). That segment now makes up around 11% of the company's total pharmaceutical revenue, according to Whalesbook. Sri Lanka gives Zydus a low-cost manufacturing base that could one day supply other South Asian or African markets.
For Sunshine Holdings, the upside is technology. Zydus will transfer manufacturing know-how to the new entity, lifting local production standards. Shyam Sathasivam, Group CEO of Sunshine Holdings, called it "a strategic investment in Sri Lanka's healthcare security" and said reducing import reliance would "build a sustainable industrial base for the future," according to ScanX Trade.
Risks and Voices of Caution Around the Venture
Not everyone is cheering. Some smaller local drug makers worry that a well-funded JV with BOI backing could get preferential treatment in government tenders, squeezing them out. Patient advocacy groups have raised a different concern: they want the plant to focus on essential medicines — drugs for diabetes and heart disease — rather than high-margin products that benefit shareholders more than patients, according to The Machine Maker.
There is also a currency risk. The plant will need to import active pharmaceutical ingredients (APIs) — the raw chemicals that go into medicines. Those are priced in foreign currency. If the Sri Lankan rupee weakens again, input costs could climb and squeeze the venture's economics. Sharvil P. Patel, Managing Director of Zydus, struck an optimistic tone, saying "building strong local capabilities is key to creating resilient healthcare ecosystems," according to TradingView.
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