Johannesburg - Local drugmaker Ascendis Health has found a European company for its ambitions in that market.
The company said yesterday that it had spent R210 million on Spain’s Farmalider Pharmaceuticals for an initial 49 percent stake.
Further stakes in the company would follow depending on the growth of the business.
Ascendis chief executive Karsten Wellner said the best part was being able to avoid paying hefty interest charges to South African financiers and being able to raise the required finance in Spain.
Speaking to Business Report yesterday, Wellner was hopeful that the partnership would enable Ascendis to pay for the next tranches of its acquisition from the proceeds of the venture’s organic growth.
He said pharmaceutical deals were expensive – priced at about 15 times earnings. The Farmalider deal had come in below 10 times earnings.
Platform
“Sometimes I make a joke about the fisherman: you don’t know which fish is going to bite at which time. This fish was biting; it is a good fish, a fantastic fish, on which we can build our base for the future,” he said with regard to Ascendis’ new foothold in the Spanish market.
“It will be a kind of platform company for Spain. We will look for other platform companies in other markets and we do smaller bolt ons onto these platform companies, like we have done in South Africa very successfully in the last years,” he added.
Wellner said Ascendis, which debuted on the JSE in November 2013, had an acquisitions kitty of about R150 million left over after its shopping spree last year.
Ascendis Health is the health products subsidiary of Coast2Coast Investments.
Wellner said Ascendis aimed to complement its organic, acquisitive and synergistic growth in the domestic health-care market through a strategy of international expansion, with a target of achieving 30 percent of revenue in offshore markets in the medium term. This would help the company to grow and diversify across different markets and increase foreign denominated earnings.
“Spain opens for us a good entry into the European markets and a pharmaceutical market is quite interesting for us because generics… have been growing by 13 percent compounded average growth from 2010 to 2014,” he said.
Approach
Ascendis will retain Farmalider’s management and the staggered acquisition approach will allow Ascendis to get to know its partners, while gaining a better understanding of the new market.
“This we are so proud of because it is our first international deal and it also makes sense from an economic point of view,” Wellner said.
He said Spain’s recent economic problems also made this a fantastic deal because of the low costs of production, an improving economy and comparably lower salaries than elsewhere in Europe.
Wellner said Ascendis was eyeing Europe, Australasia, New Zealand and Africa for regional opportunities.
Shares on the JSE rose 0.63 percent to close at R15.95.
Fast Facts
October 2014- Ascendis Health enters into an agreement to acquire SG Diagnostics, the biggest division of Scientific Group.
August- Ascendis Health announces the acquisition of six leading products from Arctic Healthcare in a deal valued at R151m. These are Chela-Fer, Menacal7, Chela-Preg, Chela-Mag, Osteoflex and Supa Chewz.
June- Ascendis Health announced the 100% acquisition of Pharma Natura from Guy Wertheim Aymes Family Holdings for R121m.
October 2013- Ascendis Health acquires Nimue Skin Technology (Nimue Skin) and Scientific Sports Nutrition (SSN) for R120m.
February 2015 - Ascendis Health’s acquisition of Surgical Innovations brings total investment in the last two years to over R1.6bn.
BUSINESS REPORT