Aspen (South Africa) has announced its intention to acquire an active pharmaceutical ingredient manufacturing business from Merck & Co. (US), which will most likely add biologics capabilities to Aspen's product portfolio.
IHS Global Insight perspective | |
Significance | Aspen Holdings (South Africa) has announced it is to acquire an active pharmaceutical ingredient manufacturing business from Merck & Co.(US) at a cost of USD1 billion. |
Implications | The acquisition gives Aspen access to a number of manufacturing facilities and sales offices. The acquisition also gives Aspen the option to acquire products from Merck & Co. |
Outlook | The deal gives Aspen access to a number of niche biologic products with established markets. In addition, the acquisition moves Aspen towards mature markets. |
Aspen Holdings, South Africa's largest pharmaceutical manufacturer, has announced that it is to acquire Dutch New Company, an active pharmaceutical ingredient (API) manufacturing business, from Merck & Co. (US), according to reports by Business Report. The deal is believed to be worth ZAR10 billion (USD1 billion) and is expected to be completed by October 2013. The business achieved pro-forma revenues of EUR284 million (USD371 million) in 2012.
Molecules for which Aspen retains the option of acquisition | |
Molecule type | Brands |
Anabolic steroid | Deca Durabolin |
Anti-coagulant | Orgaran |
Corticosteroid | Decadron, Oradexon, Meticortelone, Metricorten |
Hormone replacement therapy | Metrigen, Ovestin, Sustanon |
Hyperthyroidism | Strumazol, Thyrax |
Oral Contraceptives | Gracial, Novial |
Vitamin B Complex | Benutrex |
The acquisition will see Aspen gain an API manufacturing facility in Oss, the Netherlands, alongside parts of manufacturing facilities in Moleneind, De Geer sites, the Netherlands. Aspen has also gained a satellite manufacturing facility in Sioux City, Iowa, in the United States. Alongside manufacturing facilities, Aspen has also gained access to sales offices in Oss and Des Plaines, Illinois, US.
In addition to the facilities, Aspen has gained options to acquire access to a number of finished form molecules. These molecules reportedly cover a number of therapy areas including oral contraceptives, vitamin B, anti-coagulants, steroids, and hormone replacement therapies. The facility also provides Aspen with facilities for the manufacturing of heparin.
Outlook and implications
The move to acquire the business is likely to be considered highly strategic and will fit in with a number of key priorities for Aspen. First, the acquisition provides access to heparin, which is an ingredient in Fraxiparine, one of the candidates which Aspen announced it was seeking to acquire from GlaxoSmithKline (UK) last week (see United Kingdom - South Africa: 19 June 2013: GSK receives offer for its thrombosis brands from Aspen).
The acquisition also gives Aspen access to a number of niche products and biologics. Given their complexity of design and manufacturing, biologics can offer a price premium over traditional small molecule products. In addition, niche products typically have established markets and relationships with physicians. By their nature, niche products typically face less competition. With the small molecule generics space becoming increasingly competitive, moves into niche markets are viewed as a means to maintain revenue growth.
The move also marks a geographical shift in Aspen's business strategy. At present, Aspen's sales are primarily concentrated in emerging markets – contributing around 82% of Aspen's revenues (see South Africa: 11 March 2013: Aspen's H1 results show 20% revenue growth). The acquisition may therefore be seen as a means of expanding Aspen's sales footprint in mature markets.