ABT’s acquisition of Solvay’s drug business is now official. The deal price is €$4.5B-4.8B ($6.6B-7.0B) cash, depending on the satisfaction of unspecified milestones between 2011 and 2013. CC Monday at 8am ET. As previously posted, I think this is a fine deal for ABT.
›Abbott to Acquire Solvay Pharmaceuticals Business
Diversifies Abbott's pharmaceutical products, expanding international growth platform Supports long-term strategy to bolster presence in key global emerging markets Adds substantial R&D spending capacity to accelerate promising pipeline programs Establishes Abbott's presence in the growing global vaccines market Provides accretion of approximately $0.10 to ongoing EPS in 2010, accelerating to more than $0.20 by 2012, increasing thereafter
Monday September 28, 2009, 1:00 am EDT
ABBOTT PARK, Ill., Sept. 28 /PRNewswire-FirstCall/ -- Abbott today announced a definitive agreement with the Solvay Group for Abbott to acquire Solvay's pharmaceuticals business for EUR 4.5 billion ($6.6 billion) in cash, providing Abbott with a large and complementary portfolio of pharmaceutical products and a significant presence in key global emerging markets. The acquisition also includes full global rights to the fenofibrate franchise. Currently Abbott has U.S. rights to fenofibrate and pays royalties to Solvay.
Belgium-based Solvay Pharmaceuticals will add more than $3 billion in annual sales, the majority outside the U.S. Solvay has significant presence and infrastructure in key high-growth emerging markets, including Eastern Europe and Asia. Emerging markets are growing faster and increasing in importance due to demographics, rising incomes and expanded treatment of chronic disease.
The acquisition will also add approximately $500 million to Abbott's annual pharmaceutical R&D investment, providing Abbott with the opportunity to further accelerate near and long-term pharmaceutical growth.
"The acquisition of Solvay Pharmaceuticals further diversifies our pharmaceutical portfolio, expands our presence in key high-growth emerging markets, enhances our investment in R&D and accelerates our long-term earnings-per-share growth outlook," said Miles D. White, chairman and chief executive officer, Abbott.
"In anticipation of future market needs, we are ensuring we have the technologies, products, infrastructure and reach to serve patients globally and continue to deliver sustainable industry-leading growth. This acquisition, as well as the others we've announced this year all contribute to achieving that long-term goal," said Mr. White.
"With this transaction Solvay Pharmaceuticals has found a new strong home, within a respected company with a solid and committed position in the industry," comments Christian Jourquin, chief executive officer, Solvay.
Solvay's pharmaceutical portfolio complements Abbott's presence and expertise in specialty markets such as cardiovascular disease, neuroscience and gastroenterology. Solvay has treatments for Parkinson's disease, Meniere's disease (abnormality of the inner ear), vertigo, and irritable bowel syndrome. Solvay also offers products to treat men's and women's hormonal health, and exocrine pancreatic insufficiency (inability to properly digest food), which is associated with several underlying conditions including cystic fibrosis and chronic pancreatitis.
The acquisition also includes Solvay's vaccines business, which will provide Abbott entry into the expanding global vaccines market. Solvay has a small molecular diagnostics unit that will become part of Abbott's diagnostics organization upon the transaction close.
"Abbott's international pharmaceutical business has grown significantly over the past several years, driven by specialty products in developed markets," said Olivier Bohuon, executive vice president, Pharmaceutical Products Group, Abbott. "In emerging markets where chronic disease is being treated more aggressively, the combined Abbott and Solvay portfolio of branded generics expands the global reach of these medicines. Solvay's business will also give us a platform to enter the attractive global vaccines market."
Financial Highlights
The transaction will be approximately $0.10 accretive to ongoing earnings per share in 2010, accelerating to more than $0.20 by 2012, increasing thereafter, all before one-time transaction-related items, which will be provided at a later date. These one-time transaction-related items are expected to occur between 2010 and 2012. The transaction also includes payments of up to EUR 300 million if certain sales milestones are met between 2011 and 2013.
Abbott plans to fund the transaction with cash currently on the balance sheet.
This transaction is subject to customary closing conditions and regulatory approvals and is expected to close in the first quarter of 2010. As a result, the deal will have no impact on 2009 ongoing earnings per share. The boards of directors of both companies have approved the proposed acquisition.
Barclays Capital served as an exclusive financial advisor to Abbott on this transaction.
Abbott Conference Call
Abbott will conduct a special conference call today at 7 a.m. Central time (8 a.m. Eastern time) to provide an overview of the transaction. The live Web cast will be accessible through Abbott's Investor Relations Web site at www.abbottinvestor.com.
About Solvay Pharmaceuticals
Solvay Pharmaceuticals is a research driven group of companies that constitutes the global pharmaceutical business of the Solvay Group. These companies seek to fulfill carefully selected, unmet medical needs in the therapeutic areas of neuroscience, cardiometabolic, influenza vaccines, gastroenterology and men's and women's health. Its 2008 sales were EUR 2.7 billion, and it employs more than 9,000 people worldwide. For more information, visit www.solvaypharmaceuticals.com.
About Abbott
Abbott (NYSE: ABT - News) is a global, broad-based health care company devoted to the discovery, development, manufacture and marketing of pharmaceuticals and medical products, including nutritionals, devices and diagnostics. The company employs more than 72,000 people and markets its products in more than 130 countries.‹
ABT Acquires More Branded Generics for Emerging Markets
[Building on the recent Solvay acquisition (#msg-41922225), this deal with Zydus Cadila will give ABT $5B in annual sales of branded generics, making it one of the leading players in this arena; financial terms were not disclosed. As was the case with Solvay, an attractive aspect of this deal is tax efficiency: by redeploying profits from foreign subsidiaries in other foreign subsidiaries, ABT avoids the substantial US tax hit that would occur if it repatriated the money. (Note: in Big Pharma’s parlance, “Established Products” is a synonym for branded generics, i.e. off-patent drugs that are actively marketed.)]
›Abbott Accelerates Emerging Markets Pharmaceutical Leadership With Zydus Cadila Collaboration; Separately Creates Stand-Alone Established Products Division
• Abbott licenses 24 Zydus pharmaceutical products for 15 high-growth emerging markets; holds option for more than 40 additional products
• Abbott also announces the creation of new stand-alone Established Products Division with $5 billion in current pharmaceutical sales; business focused on fast-growing emerging markets
• Emerging markets expected to grow at three times the rate of developed markets, accounting for 70 percent of global pharma industry growth in next several years
Tuesday May 11, 2010, 7:42 am EDT
ABBOTT PARK, Ill., May 11 /PRNewswire-FirstCall/ -- Further strengthening its global competitive position, Abbott (NYSE:ABT) today announced a licensing and supply agreement with Zydus Cadila of India for a portfolio of pharmaceutical products that Abbott will commercialize in 15 emerging markets, enabling the company to further accelerate its emerging markets growth.
Abbott also announced the formal creation of a stand-alone Established Products Division (EPD) concentrated on expanding the market for Abbott's established pharmaceutical portfolio outside of the U.S., particularly focused in emerging markets. EPD will be led by Michael J. Warmuth, an Abbott leader with significant experience in Abbott's pharmaceutical business, who most recently led Abbott's Diagnostics Division.
"Our new Established Products Division, with $5 billion in sales, will focus on expanding our presence and product offerings in the world's fastest-growing emerging markets," said Olivier Bohuon, executive vice president, Pharmaceutical Products Group, Abbott. EPD is part of the Pharmaceutical Products Group reporting to Bohuon.
Abbott's growing portfolio of established products consists of branded generics – products that have significant brand equity in many international markets – providing durable, sustainable franchises for future growth. This complements Abbott's successful proprietary products business and proprietary pharmaceutical pipeline.
The Zydus Cadila Collaboration
Under the Zydus agreement, Abbott will gain rights to at least 24 Zydus products in 15 key emerging markets where Abbott has a strong and growing presence. The agreement also includes an option for the addition of more than 40 Zydus products to the collaboration.
"The Zydus agreement complements our established products strategy, augmenting this business with a broad portfolio of branded generics," said Bohuon.
The collaboration includes medicines for pain, cancer and cardiovascular, neurological and respiratory diseases. The partnership will leverage Abbott's powerful emerging markets infrastructure to commercialize the Zydus products, with product launches beginning in early 2012.
"We have always believed in working with partners for win-win alliances that look at new opportunities for growth and expansion," said Chairman and Managing Director Zydus Cadila, Pankaj R. Patel. "In this alliance we see tremendous opportunity to participate in multiple ways in a market that is growing and expanding rapidly. Building on our mutual strengths we are creating a considerable competitive advantage for value creation for both partners over the long term."
The financial terms of the agreement were not disclosed.
Abbott's Established Products Strategy
Abbott's new Established Products Division will market Abbott's established products portfolio outside of the U.S., with a focus on accelerating growth in emerging markets.
Throughout the past decade, Abbott has built a leading portfolio of branded generics, through its own products as well as those acquired with the 2001 acquisition of Knoll's pharmaceutical business. In 2007, the company established a separate business unit within its international pharmaceutical division dedicated to established products.
Additionally, a new geographic region focused on Russia, India and China was created which resulted in the doubling of Abbott's growth rate in those countries.
Most recently, the company acquired Solvay Pharmaceuticals, obtaining a diverse branded generics portfolio and providing significant critical mass in key emerging markets[#msg-41922225]
As a result of these combined actions, Abbott is now among the leading multi-national health care companies in numerous emerging markets. Approximately 20 percent of Abbott's pharmaceutical sales today are in emerging markets.
Emerging Markets Opportunity
Pharmaceutical sales in emerging markets are expected to grow at three times the rate of developed markets and account for 70 percent of the industry's growth over the next several years. Branded generics represent the most significant growth opportunity in emerging markets. Today, branded generics account for 25 percent of the global pharmaceutical market, have the majority of market share in the largest emerging markets, and are expected to outpace growth of patented and generic products.
About Zydus Cadila
Zydus Cadila is an innovative global pharmaceutical company that discovers, develops, manufactures and markets a broad range of healthcare therapies. With an aim to be a research-based pharmaceutical company by 2020, Zydus Cadila invests nearly 8 percent of its turnover on research annually. The group employs over 11,000 people worldwide and is dedicated to improving people's lives. Additional information about Zydus is available at http://www.zyduscadila.com.‹
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