Pharmstandard buys Singapore API firm to guarantee supply
pharmafile | August 16, 2013 | News story | Manufacturing and Production |Â Â OTC, Pharmstandard, beverÂ
Russia’s largest drug company Pharmstandard has agreed a $590 million deal to buy the Singapore-based supplier of active pharmaceutical ingredients used in in two of its key products.
The deal for Bever Pharmaceutical will be funded by equity in Pharmstandard valued at $542 million plus a cash consideration of $48 million, and is due to be considered by the Russian firm’s shareholders at a meeting on 17 August.
The transaction will “secure a long-term supply of critical APIs for two flagship brands at lower cost”, said Pharmstandard.
The two APIs are arbidol, an antiviral used to treat influenza, and afobazole which is used to treat anxiety. Taking over Bever will allow Pharmstandard to reduce the cost of afobazole from $3,000 to $340 per kilo, and slash arbidol’s cost from $1,800 to $250 per kilo. The new contracts will reduce spending on the APIs from around $70 million a year to $10 million.
The Russian company is buying Bever from Pharmstandard board member Alexander Shuster, who will become Pharmstandard’s second-largest shareholder with an 18.7% stake.
Bever will be incorporated into Pharmstandard’s branded over-the-counter (OTC) business unit, which is due to be spun off into a separate company with 2012 net revenue of 12.7 billion roubles ($385m) and operating profits of 4.5 billion roubles. The ultimate plan is to list the unit on the Moscow stock exchange.
Adding Bever to the portfolio will “increase the profitability profile of the OTC business segment”, said Pharmstandard. Shares in the Russian drugmaker were hit hard last month after it disclosed the plans to buy Bever, but did not provide any detail about the rationale for the deal.
Once the spin-out takes place, Pharmstandard will be left with a branded and generic prescription medicines business with pro forma 2012 operating profit of $495 million, on sales of around $1.91 billion.
The company has been on something of an acquisitive streak of late. A year ago it snapped up a majority stake in the Bioprocess Group, which consists of biologic drug producer and contract manufacturer Biomed and interferon alfa-2a producer Pharmapark, and also recently acquired oral dosage form specialist Lekko OJSC.
The company indicated on a conference call it was open to additional merger and acquisition deals to bolster its prescription drug business.
Phil Taylor
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