IHS Global Insight Perspective | |
Significance | Swiss firm Nycomed has purchased 20 branded generics from Sanofi-Aventis subsidiary Zentiva for an undisclosed sum. |
Implications | The drugs are sold in Bulgaria, the Czech Republic, Estonia, Hungary, Romania and Slovakia, and bring in a combined total of 17 million euro in annual sales. The purchase strengthens Nycomed's existing presence in these markets and provides new revenue for the group as it awaits an FDA verdict on COPD drug Daxas. |
Outlook | The new drugs are a low-risk way to build up Nycomed's market strength in Central and Eastern Europe. If the FDA chooses not to approve Daxas, Nycomed's strength in these markets could make it an attractive takeover prospect. |
Swiss drug-maker has made a surprise move to acquire 20 branded generics from Czech producer Zentiva, a subsidiary of French pharma giant Sanofi-Aventis. While the acquisition's price tag has not been disclosed, the 20 drugs in question bring in combined annual sales of 17 million euro (US$24.5 million). The drugs are sold in markets across Central and Eastern Europe, giving Nycomed access to established sales patterns in Bulgaria, the Czech Republic, Estonia, Hungary, Romania and Slovakia. Nycomed is expecting to close the transaction in September, and has already received the backing of the European Commission (EC) and the Czech Antimonopoly Office.
The best-known brand among those included in the deal is insomnia drug Hypnogen (zolpidem), which is sold in the Czech, Slovak and Estonian markets. Nycomed will also gain rights to three separate beta-blockers for cardiovascular disease—Betaxa (betaxolol), Tenoloc and Vasocardin—and several other branded drugs with a strong regional presence, such as heart disease drug Trental (pentoxifylline), liver inflammation treatment Flavobion, and infectious diarrhoea drug Ercefuryl (nifuroxazide).
Privately owned Nycomed is already represented in all of the Central European countries included in the Zentiva deal, after having made considerable inroads into regional European markets in recent years (see Switzerland: 7 November 2007: Nycomed Enters Slovak Pharmaceutical Market). However, the branded generics purchase will also see the Swiss firm assume manufacturing responsibilities for the 20 drugs "in the coming years". Nycomed said the acquisition would strengthen its stake in the primary care sector in the Czech and Slovak markets in particular, and would mesh well with its existing product offerings in all the affected countries.
Earlier this year, reports emerged that Nycomed's directors were considering putting the company up for sale, as one of several possible strategic options (see Switzerland: 24 March 2009: Nycomed Reported as Up for Sale). However, subsequent European Union (EU) approval of its over-the-counter version of gastric drug pantoprazole and an anticipated U.S. approval for chronic obstructive pulmonary disease treatment Daxas (roflumilast) appear to have persuaded Nycomed against a sale (see Switzerland: 21 July 2009: Nycomed Makes FDA Push for Daxas, Draws Mixed Reviews for Rumoured Solvay Bid and Switzerland: 18 June 2009: Nycomed Receives European Approval for OTC Version of Gastrointestinal Drug Pantoprazole).
Outlook and Implications
The acquisition of branded generics from a well-established Central European player will strengthen Nycomed's market presence in the region, but also underscores the importance of generics and OTC treatments in supplementing its revenue while its pipeline of innovative medicines develops. The inclusion of Hypnogen in the acquisition suggests that Sanofi-Aventis—which markets the original branded version of the active ingredient zolpidem under the Stilnox and Ambien brands—may not have been allowed to keep Hypnogen as a part of Zentiva under Czech antitrust law. For Nycomed, its addition into the mix will prove a bonus, as one of the best-selling insomnia treatments on the market at a competitive generic price.
It is too early to completely write off the possibility of Nycomed being put up for sale, and much will depend on whether the FDA chooses to approve Daxas for U.S. marketing. If approval is refused, Nycomed would potentially become vulnerable to a buyout, and its increasing strength in the dynamic Central and Eastern European pharmaceutical markets would make it an attractive takeover proposition.