National Post (National Edition)
Valeant slated to expand in Mideast, Africa
PURCHASE OF AMOUN
MON TR EA L • Valeant Pharmaceuticals International Inc. is buying a major Egyptian pharmaceutical company for about US$800 million as a platform for further expansion in the Middle East and North Africa.
The Laval, Que.-based company reported Friday it has a definite agreement to buy Amoun Pharmaceutical from Mercury (Cayman) Holdings.
Valeant chief executive Michael Pearson said he hopes the company will be able to take advantage of both rising incomes and a growing population in the region.
“It’s not part of the world where a lot of the larger pharmaceutical companies have a big presence,” said Pearson. “After Amoun we’ll be one of the largest companies in that area and we’ ll continue to grow.”
Sources have been reporting on the negotiations since May, though Valeant would not comment on the rumours until Friday.
Pearson said Valeant decided to prioritize the Middle East and Northern Africa region about a year ago. However, they only had a small operation in the area after acquiring MedPharma in 2014, which represents between US$30 million and US$40 million in sales a year.
“You need to get to critical mass or you’re not going to make much money,” Pearson said.
Amoun Pharmaceutical is the largest domestic company in the Egyptian pharmaceutical market and currently expects to reach 1.75-billion Egyptian pounds (US$223 million) in sales by the end of 2015.
Pearson said Valeant should be making more than US$500 million in revenue from the region in the next year.
“We’ll certainly enjoy the growth of the market and hopefully beat the growth of the market,” he said.
The deal will include Amoun’s manufacturing plant, which Valeant says is one of the largest and most modern in the region.
Amoun has branded product s for the treatment of hypertension, infections and diarrhea, though Pearson said the company will likely expand the regional drug portfolio by bringing in more of Valeant’s products to be manufactured on site.
He said the company will save some money though synergies with Valeant’s existing infrastructure, but will also expand sales and marketing into other countries.
If the transaction closes as planned, it will be Valeant’s biggest acquisition since it paid US$11.1 billion to buy Salix Pharmaceuticals in a deal that closed April 1 after a bidding war with Irish rival Endo International.
Pearson said that the company’s future focus will be honouring its commitment to bond holders and lenders to bring Valeant’s leverage ratio below four times by the second half of 2016.
“We will generate a lot of cash between now and then. Some of that cash will go to paying down debt and part of that will go to tuck-in acquisitions,” he said.
Pearson would not comment on specific future acquisition targets, though he did say the company sees growth potential in Asia, South America and the U.S.
“We look across our markets and we look for opportunities. When the right ones come along we move quickly and get deals done,” Pearson said.