Moneyweb
South African-based multinational pharmaceutical company Aspen Pharmacare will acquire a portfolio of drug products in Latin America from American-based global pharmaceutical company Viatris in a $280 million transaction (around R5.12 billion).
The transaction, conducted through Aspen’s Mauritius-based subsidiary Aspen Global Incorporated (AGI), will see the drugmaker owning the commercialisation rights and related intellectual property attached to Viagra, Lipitor, Norvasc, Zoloft, and Celebrex branded products, among others.
"The Transaction represents an attractive opportunity for Aspen to expand its presence in one of the Group’s key regions. In doing so, Aspen will acquire a basket of well-established, post-patent brands that will complement its existing portfolio and add to the scale of its business in this region,” the JSE-listed company said in a Sens statement.
Furthermore, the acquisition of a dedicated and experienced sales team will materially enhance Aspen’s commercial capabilities, further strengthening its foundations for future growth in Latin America."
Wayne McCurrie of FNB Wealth and Investments tells Moneyweb one shouldn’t read too much into this somewhat underwhelming response to the deal as it just represents the market taking time to digest the announcement.
"I think it’s really good. They are getting good products there and it’s well established, and they have already got quite a big presence in the market and I think this scales it up quite nicely," says McCurrie.
"I wouldn’t worry too much about that [share price moves]. I mean they haven’t said what the profitability of the business is or anything like that. I think the market will wait for a bit more information … to see what sort of price they paid for it relative to the profit [potential]."
According to Aspen, AGI will fund the acquisition through the combination of a cash payment of $150 million (about R2.67 billion), which will be funded using existing debt facilities, and the extension of supply terms to Viatris.
Once approved by Ecuadorian and Columbian competition authorities AGI will be supplied with the products for at least seven years, it added.
Although Aspen cannot accurately guide the market on the products’ profit potential, the pharmaceutical giant notes that the products it will acquire generated $92 million in sales in the year ended December 2022.
“It is expected that the gross margin from the Products should be higher than Aspen’s Commercial Pharmaceutical segment gross profit percentage for the six months ended 31 December 2022 of 60%.”
Aspen says it expects the sale to be finalised by 1 October.
