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Zentiva buys Sicomed in latest generics M&A

By Phil Taylor , 20-Sep-2005

The consolidation in the generic pharmaceutical industry continues apace, with companies in the easterly reaches of Europe now getting in on the act. Czech Republic-headquartered Zentiva has signed an agreement to acquire 51 per cent of S C Sicomed, the number one generic drugmaker in Romania, for $102 million in cash.

Zentiva also intends to launch an offer for the remainder of Sicomed's shares at a 37 per cent premium to the firm's average closing price for the one-month period ended September 14, bringing the total acquisition price to a level of around $200 million.

Commenting on the deal, the Czech group's chief executive, Jiri Michael, said: "the acquisition of Sicomed is in line with the strategy that we announced at the time of our IPO [initial public offering] in 2004 of expanding into other key Central and Eastern European markets."

Other acquisitions may also be in the pipeline, said Michael. Zentiva has already successfully integrated Slovakofarma, acquired in 2003, and said the addition of Sicomed would give it rapid route into the fast-growing Romanian pharmaceutical market.

Earlier this year, Sicomed forecasted that the Romanian drugs sector will grow to $2.2 billion in 2007, with product consumption valued at $100 per person, up from a level of around $945 million in 2005. Sicomed holds a 27 per cent share of the total market by volume - and 5.5 per cent by value - and is planning to launch 10 new drugs on this market each year.

"Sicomed's strong presence in the fast-growing Romanian market, and in particular its unrivalled distribution network, will enable us to capitalize on our modern branded generic portfolio and deep product pipeline to build rapidly a clear leadership position in the primary care market," commented Michael.

Sicomed has a broad product portfolio, with central nervous system and alimentary being the largest therapeutic areas, and significant presence in cardiovascular, anti-infectives and respiratory diseases.

Sicomed was listed on the Bucharest Stock Exchange in 1998 and its privatisation was completed in 1999 with a majority of the company being acquired by a group of institutional investors. New management was brought into the firm in 2002 and initiated a significant restructuring process, including a rationalisation and modernisation of the firm's product portfolio and disposing of its non-core business activities.

Last year, Sicomed generated gross sales of around $56 million and earnings before interest, tax, depreciation and amortisation of about $12 million. In contrast, Zentiva's 2004 sales were $437 million.

Michael said the acquisition enhances Zentiva's leadership position in the Central and Eastern Europe pharmaceutical market and provides the company with an even stronger platform for organic growth.

Zentiva says it has already demonstrated the attractiveness of the primary-care sector opportunity through its existing Romanian organisation, achieving the leading market position in the statin category with its product Simvacard (simvastatin) within six months of launch.

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