Abbott Buys Veropharm, Expanding Manufacturing and Pipeline
Abbott said it will acquire Veropharm for up to $631 million including assumption of debt, in a deal the buyer said reflected its commitments to growing in Russia, and expanding its worldwide presence in drug manufacturing.
Veropharm is one of Russia’s largest generic drug makers with three existing facilities: a chemical and pharmaceutical plant at Voronezh, and plants in Belgorod and Pokrov that specialize in ready-made medications. Those facilities, according to Veropharm’s website, have a total annual production capacity of 591 million tablets and capsules, 7 million ampoules, 468 million plasters, and 43 million vials.
A fourth manufacturing facility is under construction.
“Abbott intends to utilize its manufacturing expertise to expand Veropharm's capabilities and enhance the existing infrastructure,” the buyer said in a statement.
Last year Abbott spun off its branded pharmaceuticals business into AbbVie, but retained a presence in branded generics that it seeks to grow with its two recently announced acquisitions.
In addition to buying Veropharm, Abbott said last month it would acquire CFR Pharmaceuticals, a Chilean developer of branded generic drugs, for up to about $2.9 billion, plus assumption of about $430 million in debt. The CFR deal alone would more than double Abbott’s presence in branded generics.
In buying Veropharm, Abbott will gain the acquired company’s portfolio of more than 100 drugs aligned with several of the buyer’s areas of therapeutic interest—including women's health, central nervous system, cardiovascular, and gastroenterology, as well as an oncology treatment.
Founded in 1997, Veropharm employs more than 2,000 people.
Abbott will buy Veropharm by acquiring the holding company that currently owns a controlling interest in Veropharm, Limited Liability Company Garden Hills, for between 13.6 billion and 17 billion rubles—or between about $395 million and $495 million.
The range reflects Garden Hills’ current ownership of 80% of Veropharm, and its expectation that its stake will grow to 95% by the time the transaction closes. That is expected to occur in the fourth quarter, subject to customary closing conditions and regulatory approvals.
Abbott has also agreed to assume 4.7 billion rubles (about $136 million) in net debt. The buyer said it would fund the transaction using cash on its balance sheet.
Abbott said the Veropharm acquisition will not impact Abbott's ongoing earnings-per-share guidance for this year, while adding about $150 million to its 2015 sales.
Abbott has operated in Russia since 1978, when it was part of the Soviet Union. The company’s Russian operations are headquartered in Moscow.
Russia is one of more than 150 countries where Abbott operates, employing a total of approximately 69,000 people.