Londiwe Buthelezi
South Africa’s leading generic drug manufacturer, Aspen Pharmacare, has made an offer to buy two of GlaxoSmithKline’s (GSK’s) branded thrombosis medicines, Arixtra and Fraxiparine, as well as a manufacturing facility.
The two medicines, which are used for treatment of blood clots during operations, had global sales of £420 million (R7 billion) last year.
Fraxiparine is a biological drug, while Arixtra is a chemical product mostly used in hip replacement operations.
The deal excludes the acquisition of these drugs in China, India and Pakistan. The two companies did not disclose the financial terms.
Although the sales of Arixtra and Fraxiparine had been in decline after they recorded sales of £510m in 2011, Aspen chief executive Stephen Saad said it would fix the supply chain to reverse this trend.
“These products require a lot of focus on the supply chain and our acquisition of the Merck facility in Netherlands will allow [an] integrated supply chain,” Saad said.
Aspen announced in February that it was in discussions with Merck’s European unit, MSD, about an acquisition of its Dutch active pharmaceutical ingredient plant.
Saad said Aspen had worked together with GSK in proposing the deal announced yesterday, since the company was always open to sell its non-core products to Aspen. He expected the two companies to close the deal in a couple of months as the offer was subject to consultation with employees and the relevant works councils.
If successfully concluded, the deal, which includes the transfer of a sterile manufacturing facility in France, would also see about 1 000 GSK employees absorbed by Aspen.
Saad said among these were over 400 GSK representatives, most of whom were based in central Europe and Russia, the markets perceived to have greatest potential. “It is quite a big deal for us and when we’ve concluded it, together with that of Merck, it will create a critical mass for Aspen,” he said.
Jean Pierre Verster, an analyst at 36One Asset Management, said the proposed GSK transaction sat well with the possible acquisition of Merck’s active pharmaceutical ingredient plant, especially as it involved the transfer of a manufacturing site.
“The deals complement each other, so it’s very clever of Aspen management. It shows that they are very astute in deal making,” Verster said.
According to Verster, if Aspen pulls these two facilities under its umbrella, the synergies that would be achieved between them would strengthen the company’s operational and financial prospects.
While no earnings impact was disclosed, Verster said that the deal would probably be earnings accretive, which would be positive for Aspen’s share price. The stock increased after the deal was announced at around 1pm.
Aspen’s share price jumped 4.44 percent higher to close at R193.25. However, the close was still well shy of its 52-week high of R223.91 touched on May 16.
GSK said the proposed sale was aligned with its strategy of focusing on products with the most growth potential and the delivery of its pipeline.
Saad said the two products did not make up a big part of the GSK portfolio and as the company constantly launched new products, those needing extra focus became non-core.
Aspen and GSK have a long history of doing deals together. Last year, the UK pharmaceutical giant sold 25 of its “Classic Brands” pharmaceutical products marketed in Australia to Aspen for £172 million.