By Marie Daghlian
Emerging market M&A headlined the third week of May as Big Pharma continued its push into emerging markets. Abbott Laboratories (NYSE:ABT) wasted no time after creating its Established Product Division to expand its branded generics market share, especially in emerging markets. The company announced a definitive agreement with Piramal Healthcare Limited to acquire full ownership of Piramal's Healthcare Solutions business, one of India’s top branded generics companies, for an upfront payment of $2.1 billion, plus $400 million annually for the next four years. The $3.7 billion deal will make Abbott in the leader in the Indian pharmaceutical market.
Speculation had been rife that Piramal was poised to be acquired, most likely by GSK, Pfizer (NYSE:PFE), or Sanofi-Aventis (NYSE:SNY). But U.S. healthcare giant Abbott beat them to the table, moving as fast as its competitors to be a major player in the global market. The acquisition comes fresh off the heels of a product licensing deal with Zydus Cadilla, another top Indian pharmaceutical, and the 2009 acquisition of Solvay Pharmaceuticals.
“Emerging markets represent one of the greatest opportunities in health care not only in pharmaceuticals but across all of our business segments,” says Miles D. White, chairman and CEO of Abbott. “ Today, emerging markets represent more than 20 percent of Abbott's total business.”
"With this deal, the combined Healthcare Solutions and Abbott businesses will become the clear market leader in India, with a market share of approximately 7 percent,” according to Ajay Piramal, chairman of the Piramal Group. “This was our collective vision and I am glad that those who are part of Piramal's Healthcare Solutions business will realize this dream," he says.
India is one of the world's fastest-growing pharmaceutical markets, due in large part to branded generics. The market will generate nearly $8 billion in pharmaceutical annual sales this year, a number that is expected to more than double by 2015. Abbott estimates the growth of its Indian pharmaceutical business with Piramal to approach 20 percent annually, with expected sales of more than $2.5 billion by 2020.
Approximately 20 percent of Abbott's pharmaceutical sales today are in emerging markets. Piramal’s Healthcare Solutions will become part of Abbott’s newly created Established Products Division.
Rumors had also surrounded a possible takeover of Australia’s troubled generic pharmaceutical company and drug distributor Sigma Pharmaceuticals. Melbourne-based Sigma is Australia’s biggest drug distributor by market share.
The company had lost more than half its value after reporting a loss of almost $400 million, the resignation of its CEO Elmo de Alwis, most recently, the resignation of its CFO Mark Smith, and soon the resignation of its chairman, John Stocker. Amid these hardships, South Africa’s Aspen Pharmacare has stepped in to offer $1.2 billion, or 60 cents per share and assumption of debt, for the ailing company.
The offer represents a 71 percent premium to Sigma’s share price of 35 cents just before the announcement. It doesn’t really take into consideration, though, the fact that the company’s sales forecast for 2010 is almost $3 billion.
“The next key milestone will be Aspen’s due dilgence,” Dan Hurren, a health-care analyst at UBS AG in Sydney told Bloomberg news. “Sigma faces a range of problems both internal and industrywide.”
Sanofi-Aventis also continued its thrust into emerging markets through the acquisition of Poland’s Nepentes, a manufacturer of pharmaceuticals and dermocosmetics, for $130 million. A public tender offer for all of the outstanding shares of Nepentes was launched by Sanofi-Aventis sp. Z o.o, a subsidiary. Controlling shareholders of Nepentes have agreed to tender their 63 percent share ownership to Sanofi.
Finally, bringing a long deal-in-the-making to a close, OSI Pharmaceuticals (OSIP) agreed to be acquired by Japan’s Astellas Pharma (OTCPK:ALPMF) in a deal valued at $4 billion. Astellas finally closed the deal after it budged and sweetened its offer from the original $52.50 per share to $57.50 per share. For its money, Astellas will get revenues from cancer drug Tarceva and OSI’s pipeline of metabolic and oncology candidates.
Deals for the Week Ending May 17, 2010
|Global Venture Financings|
|Company||Location||Amount Raised ($M)||
|Cambridge Endoscopic Devices||Framingham, MA||3.00||Surgical tools|
|Stemgent||Cambridge, MA||5.60||Stem cells|
|TPP Global Development||Edinburgh, UK||14.20||Drug development|
|Cytogel Pharma||Darien, CT||2.20||Biopharmaceuticals|
|Breath Technologies||San Ramon, CA||23.00||Medical devices|
|Celula||San Diego, CA||15.00||Diagnostics|
|Durin Technologies||New Brunswick, NJ||0.20||Diagnostics|
|Arsenal Medical||Watertown, MA||10.00||Ophthalmology, cardiovascular|
|NeuroTherapeutics Pharma||Chicago, IL||43.00||CNS|
|Inova Labs||Austin, TX||10.00||Medical devices|
|Afraxis||San Diego, CA||1.20||Fragile X|
|Itherx Pharmaceuticals||San Diego, CA||2.80||Hepatitis C|
|Cyntellect||San Diego, CA||9.00||Stem cells|
|GeneLogics||Victoria, British Columbia, Ca||1.00||Healthcare IT|
|TOTAL RAISED US||$125.20|
|TOTAL RAISED NON-US||$30.00|
|Grants and Contracts|
|Protalix Biotherapeutics (Israel)||Office of Chief Scientist||4.10||Plant-based protein therapeutics|
|Population Diagnostics||National Institutes of Health||n/a||Parkinson's diagnostics|
|Lentigen||NIH STTR||n/a||Gene delivery technology|
|InVasc Therapeutics||NIH SBIR Phase 1||0.40||Vascular therapeutics|
|Sorrento Therapeutics||NIAID STTR||0.60||Staph infection therapeutics|
|Immunetics||NHLBI||2.80||Blood safety diagnostics|
|Biovest International||US Department of Defense||1.50||Vaccine production technology|
|Trius Therapetuics||US DoD DTRA||29.50||Antibiotics|
|Total Grants and Contracts||$38.90|
|Jazz Pharmaceuticals||JAZZ||58.50||Follow on|
|Avanir Pharmaceuticals||AVNR||4.10||Follow on--overallotments|
|Nile Therapeutics||OTC:NLTX||0.68||Follow on--overallotments|
|DARA BioSciences||DARAD||10.00||Follow on|
|RegeneRx Biopharmaceuticals||RGN||4.72||Follow on|
|Cambridge Heart||OTC:CAMH||0.96||Warrant exercise|
|Cbio (Australia)||ASX:CBZ||10.63||Funding facility over 3 years|
|MethylGene (Canada)||TSX:MYG||9.10||Non-dilutive financing|
|TOTAL PUBLIC FINANCINGS-US||$81.49|
|Deal Value |
|Astellas Pharma (Japan)||OSI Pharmaceuticals||$4,000.00||Oncology|
|Abbott Laboratories||Piramal's Healthcare Solutions (India)||$3,720.00||Branded generics|
|Aspen Pharmacare (South Africa)||Sigma Pharmaceuticals||$1,230.00||Branded generics, drug distributor|
|Providence Equity Partners||Virtual Radiologic||$294.00||Radiology|
|Sanofi-Aventis (France)||Nepentes (Poland)||$130.40||Consumer health|
|St Jude Medical (NYSE:STJ) ||LightLab Imaging||$90.00||Medical imaging|
|C.R. Bard||FlowCardia||$80.00||Medical devices|
|Victory Pharma||MiddleBrook Pharmaceuticals||$17.10||Anti-infectives|
|Biotage (Sweden)||Caliper Life Sciences||$16.50||Tools/Technology|
|Tyco Electronics (NYSE:TEL) ||Zarlink Semiconductor's Optical Products (Canada)||$15.00||Medical devices|
|Ligand Pharmaceuticals (NASDAQ:LGND) ||Genaera royalty stream||$2.75||Respiratory|
|i3 (Ingenix)||ChinaGate (China)||n/a||CRO|
|Aerocrine (Sweden)||Apieron||n/a||Medical devices|
|maxIT Healthcare||Ingenuity Solution||n/a||Healthcare IT|
|Grifols (Spain)||Pharmalink (Sweden)||n/a||Infectious|
|Charlesbank Capital Partners H.I.G. Capital||TLC Vision||n/a||Eye care services|
|Company/Licensee||Company/Licenser||Deal Value |
|MP Biomedicals||RUSNANO (Russia)||n/a||Nanobiotechnology agreement|
|Hawthorn Pharmaceuticals||University of Pittsburgh||n/a||Cancer therapeutics license|
|Pfizer||Washington University||$22.50||Drug development collaboration|
|GeneDiagnostics (China)||GeneNews (Canada)||n/a||Diagnostics partnership|
|Tianjin Tasly Pharmaceutical (China)||Transgene (France)||n/a||Biologics joint venture|
|Trevena||Scynexis||n/a||GPCR ligands collaboration|
|GSK Clinical Imaging Center (GSK-United Kingdom))||ImaginAb||n/a||Antibody collaboration|
|Recopharma (Sweden)||Promosome||n/a||Technology partnership|
|Roche Diagnostics (Switzerland)||American College of Cardiology||n/a||Biomarker collaboration|
|Luminex||High Throughput Genomics||n/a||Technology partnership|
|Merck (NYSE:MRK) ||ElexoPharm (Germany)||$40.00||Cardiovascular therapeutics license|
|Institute for Systems Biology||Ohio State University||$2.00||Personalized medicine partnership|
|CTI Clinical Trial and Consulting Services||Akron Clinical (Argentina)||n/a||CRO joint venture|
|Novozymes (Denmark)||Ceres||n/a||Cellulosic biofuels research collaboration|