Pharmabiz
 

Abbott acquires Piramal's healthcare solutions business

Our Bureau, MumbaiFriday, May 21, 2010, 08:00 Hrs  [IST]

Abbott has entered into a definitive agreement with Piramal Healthcare Ltd to acquire full ownership of its healthcare solutions business (domestic formulations), a leader in the Indian branded generics market, for an up-front payment of $2.12 billion plus $400 million annually for the next four years,making Abbott the market leader in the Indian pharmaceutical market. This has further accelerated Abbott's emerging markets growth after the recent acquisition of Solvay Pharmaceuticals and announcements last week of Abbott's collaboration with Zydus Cadila as well as the creation of a new stand-alone Established Products Division to focus on expanding the global markets for its leading branded generics portfolio. "This strategic action will advance Abbott into the leading market position in India, one of the world's most attractive and rapidly growing markets," said Miles D. White, chairman and chief executive officer, Abbott. "Our strong position in branded generics and growing presence in emerging markets is part of our ongoing diversified pharmaceutical strategy, complementing our market-leading proprietary pharmaceutical offerings and pipeline in developed markets." "Emerging markets represent one of the greatest opportunities in health care – not only in pharmaceuticals – but across all of our business segments. Today, emerging markets represent more than 20 per cent of Abbott's total business," said White. "With this deal, the combined healthcare solutions and Abbott businesses will become the clear market leader in India, with a market share of approximately seven per cent," said Ajay Piramal, chairman, 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." Abbott estimates the growth of its Indian pharmaceutical business with Piramal to approach 20 per cent annually, with expected sales of more than $2.5 billion by 2020. Under terms of the agreement, Abbott will purchase the assets of Piramal's healthcare solutions business for a $2.12 billion up-front payment with payments of $400 million annually for the next four years, beginning in 2011. The transaction will not impact Abbott's ongoing earnings per share guidance in 2010. Abbott plans to fund the transaction with cash on the balance sheet. This transaction is subject to shareholder approval of Piramal Healthcare Ltd and other customary closing conditions, and is expected to close in the second half of 2010. This transaction is being conducted by a wholly-owned subsidiary of Abbott, resulting in full ownership of the assets of Piramal's healthcare solutions business . The Mumbai-based Piramal Healthcare Solutions business has a comprehensive portfolio of branded generics with annual sales expected to exceed $500 million next year in India, and market-leading brands in multiple therapeutic areas, including antibiotics, respiratory, cardiovascular, pain and neuroscience. This business grew 23 per cent in 2010 (fiscal year ended March 31) faster than the market in India. Piramal has a strong commercial presence, including the largest sales force in India with a unique model that includes dedicated sales personnel in rural areas inhabited by 70 per cent of the population. The combined Abbott and Piramal sales forces will be the industry's largest in India. Piramal's healthcare solutions business will become part of Abbott's newly created, stand-alone Established Products Division. Piramal's healthcare solutions business employs more than 5,000 people in India. Abbott, which is celebrating its 100th year in India, has more than 2,500 employees across all of its businesses there. Throughout the past decade, Abbott has built a leading portfolio of branded generics, through its own products as well as those acquired with the 2001 acquisition of Knoll's pharmaceutical business. In 2007, the company established a separate business unit within its international pharmaceutical division dedicated to established products. Additionally, a new geographic region focused on Russia, India and China was created, which resulted in the doubling of Abbott's growth rate in those countries. Most recently, the company acquired Solvay Pharmaceuticals, obtaining a diverse branded generics portfolio and providing significant critical mass in key emerging markets. As a result of these combined actions, Abbott is now among the leading multinational health care companies in numerous emerging markets. Approximately 20 per cent of Abbott's pharmaceutical sales today are in emerging markets. "We have assembled a market-leading branded generics portfolio tailored to the unique needs of emerging markets, strongly positioning Abbott to meet the current and future geographic and market dynamics in pharmaceuticals," said Olivier Bohuon, executive vice president, global pharmaceuticals, Abbott. "Piramal has built a reputation for high-quality, well-known and trusted pharmaceutical brands. We look forward to welcoming the accomplished staff of Piramal's healthcare solutions business to Abbott", he added.

 
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