Greece-based Specifar acquired by Watson Pharmaceuticals from the US
Purchase of generic drug manufacturer shows that there are good deals out there
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.