Greece-based Speci­far ac­quired by Wat­son Phar­ma­ceu­ti­cals from the US

Pur­chase of generic drug man­u­fac­turer shows that there are good deals out there

Kathimerini English - - Focus - BY VAN­GE­LIS MANDRAVELIS

Greece may have no money, but it still has an abun­dance of busi­ness op­por­tu­ni­ties, as the re­cent ac­qui­si­tion by US firm Wat­son Phar­ma­ceu­ti­cals of Speci­far, a Greece-based man­u­fac­turer of generic drugs, in­di­cates.

The Vas­silopou­los fam­ily, which had a 100 per­cent stake in Speci­far, re­ceived 400 mil­lion eu­ros in cash to hand over their shares to the Amer­i­can com­pany, while it will also re­ceive an­other 40 mil­lion over the next five years as a per­cent­age of prof­its from the drug it de­vel­oped called Es­omepra­zole, a generic tablet ver­sion of Nex­ium, used to treat acid re­flux disease.

Ac­cord­ing to one mar­ket pun­dit, “the Amer­i­can firm not only went ahead with a pur­chase in the mid­dle of Greece’s worst eco­nomic cri­sis, but they made the ac­qui­si­tion by com­pletely ig­nor­ing the coun­try’s risk fac­tor.” How­ever, he added, Speci­far was al­ready an ex­tro­verted com­pany, with some 80 per­cent of its sales made abroad, though this does not change the fact that it had its head­quar­ters and pro­duc­tion line in Greece. Wat­son, mean­while, ap­peared de­ter­mined to ac­quire the Greek com­pany, as the deal took just six months to seal.

Ac­cord­ing to one ex­ec­u­tive close to the sale, “it is un­likely that Wat­son’s in­ter­est in Speci­far in­creased as the Greek cri­sis deep­ened.” In fact, said the ex­ec­u­tive, the Amer­i­can com­pany was ready to pay 20 times more than the Greek com­pany’s 2010 earn­ings be­fore in­ter­est, taxes, de­pre­ci­a­tion and amor­ti­za­tion (EBITDA). Speci­far showed op­er­a­tional prof­its of 18.5 mil­lion eu­ros in 2010.

Ac­cord­ing to mar­ket ex­perts, Wat­son paid for three fac­tors: The first is Speci­far’s growth po­ten­tial. From a 30mil­lion-euro turnover in 2007, Speci­far saw rev­enues of 85 mil­lion eu­ros by 2010, while it is es­ti­mated that its sales will dou­ble within the next three years to reach 160 mil­lion eu­ros.

The sec­ond fac­tor is the com­pat­i­bil­ity be­tween the two com­pa­nies, as Wat­son has only a lim­ited Euro­pean pres­ence, while Speci­far mostly does busi­ness with Europe and es­pe­cially France. More­over, Speci­far is build­ing a new plant in the Oi­no­fyta re­gion north of Athens, which is ex­pected to be com­pleted by 2012 and which will rep­re­sent Wat­son’s first pro­duc­tion unit on Euro­pean soil. The new plant is ex­pected to in­crease the com­pany’s pro­duc­tion ca­pac­ity three­fold.

The third fac­tor is the Greek com­pany’s know-how in prod­uct de­sign and de­vel­op­ment. Ac­cord­ing to a re­cent state­ment by Wat­son CEO Paul Bis­aro, “the strate­gic sig­nif­i­cance of this com­bi­na­tion is sub­stan­tial” as Wat­son “will now have a pow­er­ful prod­uct de­vel­op­ment ca­pa­bil­ity rec­og­nized through­out the in­dus­try for its strong track record of suc­cess­fully launch­ing prod­ucts in key Euro­pean mar­kets, sup­ported by an ac­com­plished R&D and reg­u­la­tory ca­pa­bil­ity.”

This deal has come like manna from heaven for the gov­ern­ment, which sees it as a vote of con­fi­dence from an im­por­tant Amer­i­can com­pany that may pave the way for other sim­i­lar agree­ments. One ex­ec­u­tive at an in­vest­ment bank, how­ever, noted that “there are few in the gov­ern­ment who are in a po­si­tion to ap­pre- ciate the im­por­tance of a com­pany like Wat­son Phar­ma­ceu­ti­cals con­duct­ing pro­duc­tion and re­search in Greece.” Ac­cord­ing to other mar­ket sources, there are nu­mer­ous other com­pa­nies in Greece that, like Speci­far, are ripe for the pick­ing. One such sec­tor is fish farm­ing, which has sig­nif­i­cant ex­ports and which, if ra­tio­nal­ized, may at­tract for­eign in­vestor in­ter­est. Ac­cord­ing to the same source, the ef­fort to at­tract for­eign in­vest­ment hinges on the gov­ern­ment im­ple­ment­ing its pri­va­ti­za­tion plan. “A proper ef­fort at stream­lin­ing the state can bring a bar­rage of in­vest­ment, which will also ben­e­fit the pri­vate sec­tor,” ac­cord­ing to an­other source.

Stuck in traf­fic in a taxi I got chat­ting to the driver about his fam­ily’s sum­mer plans. He told me he has three chil­dren, aged 10, 12 and 17. “The young ones are go­ing to sum­mer camp,” he said. “My el­dest wants to get a part-time sum­mer job to earn some pocket money. I told her she should use the school hol­i­days to re­lax, to rest – she’s got a tough year ahead with univer­sity en­trance ex­ams com­ing up in her se­nior year. It was like when she was 12 and wanted to work. I’d done a deal with a hair­dresser in my neigh­bor­hood. I’d give her 2 eu­ros a day and she would give it to my daugh­ter as though she were pay­ing her wages in re­turn for do­ing odd jobs around the sa­lon. Within a few days, my daugh­ter started com­plain­ing that her feet hurt and she was tired. Now she tells me that she wouldn’t mind driv­ing the cab. The whole point, though, is that she should never have to do a job like this, so I’m try­ing to con­vince her to take it easy.”

Other than earn­ing a bit of pocket money be­yond that which most Greek par­ents give their chil­dren any­way, sum­mer jobs do not rank high in teenagers’ hol­i­day plans. Most par­ents dis­cour­age their chil­dren from get­ting jobs that they see as de­mean­ing, while em­ploy­ers are also not keyed into the ben­e­fits they can reap from hir­ing stu­dents to work for them part-time or they don’t know whether they are even al­lowed to em­ploy some­one who is un­der­age. Yet the ad­van­tages of chil­dren learn­ing to work early on are many, es­pe­cially in times of cri­sis.

A quick search on the In­ter­net for part-time sum­mer jobs open to stu­dents is in­dica­tive. The pick­ings are very slim in­deed.

The fact that Greek chil­dren are not en­cour­aged to work be­fore they grad­u­ate from high school is in it­self some­thing of a so­cial phe­nom­e­non.

Ac­cord­ing to a psy­chol­o­gist who works pre­dom­i­nantly with teenagers and who wished to re­main anony­mous, there are many ben­e­fits to re­vers­ing trend. “Other than the fact that it al­lows teenagers to gain some ex­pe­ri­ence in an area that they may later be in­ter­ested in pur­su­ing pro­fes­sion­ally,” he said, “they be­come im­mersed in a process that al­lows them to ac­quaint them­selves with a pro­fes­sional en­vi­ron­ment and to take on cer­tain new re­spon­si­bil­i­ties. Sure, school teaches them to be on time and to re­spect dead­lines, but when you have a job there are no breaks all the time, you can’t hang out with your friends and you don’t have the safety of your fa­mil­iar en­vi­ron­ment.”

The ex­pert adds, how­ever, that “it is im­por­tant to un­der­stand that Greek em­ploy­ers, even when they are will­ing to take on a teenager, know very lit­tle about the prac­ti­cal side of part-time sea­sonal em­ploy­ment for mi­nors. There­fore, what you of­ten see is teenagers hav­ing to take a lot more ini­tia­tive in get­ting a job, and this is some­thing good.”

in Greece are gen­er­ally not en­cour­aged to get sum­mer jobs.

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