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Abbott acquires CFR Pharmaceuticals in deal worth $3.3 billion

BY Michael Johnsen

ABBOTT PARK, Ill. — Abbott on Friday announced a definitive agreement to acquire Latin American pharmaceutical company CFR Pharmaceuticals, more than doubling its Latin American branded generics pharmaceutical presence the company reported. 

Under the terms of the agreement, Abbott will acquire the holding company that indirectly owns approximately 73% of CFR Pharmaceuticals and will conduct a public cash tender offer for all of the outstanding shares of CFR. Assuming all publicly-held shares are tendered, the total purchase price would be approximately $2.9 billion, plus the assumption of net debt of approximately $430 million.

This acquisition immediately establishes Abbott among the top 10 pharmaceutical companies in Latin America, further broadening Abbott’s geographic presence across the region, the company stated.

"With its scale and leadership positions in the region, strong commercial and development organizations, well-respected leadership team and a trusted portfolio of recognized brands, CFR is one of the leading branded generic companies in Latin America," stated Miles White, chairman and CEO Abbott. "This acquisition will significantly enhance and broaden Abbott’s Latin American footprint, and is well aligned with our long-term strategy and commitment to fast-growing markets."

Abbott expects the acquisition to add approximately $900 million to its sales in the first full year (2015), with expected double-digit sales growth over the next several years.

CFR Pharmaceuticals, headquartered in Santiago, Chile, participates in 15 Latin American markets and has a product portfolio that is well aligned with Abbott’s current pharmaceutical therapeutic areas of focus in women’s health, central nervous system, cardiovascular and respiratory diseases, the company noted. 

CFR currently markets more than 1,000 products.

The Latin American pharmaceutical market is expected to reach $73 billion in sales this year, and is expected to reach $124 billion by 2018, with estimated annual growth rates of two to three times that of developed markets over the coming years, according to IMS forecasts.

 

 

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Prestige: Active M&A activity in the OTC sector expected to foster additional opportunities

BY Michael Johnsen

TARRYTOWN, N.Y. — These are interesting times to be in the OTC business, Matt Mannelly, Prestige Brands president and CEO, told analysts Thursday. Because of the dynamics of the industry — a healthcare system encouraging greater self-care utilization and the fact that OTC is a cash-flow positive business — the OTC sector has become very attractive for big pharma companies looking for mergers and acquisitions. GlaxoSmithKline’s partnership with Novartis and Bayer’s bid for Merck’s OTC business, not to mention Prestige Brands’ acquisition of Insight Pharmaceuticals, may be just the beginning in what might become a very active M&A period. 

"OTC is becoming increasingly attractive to a number of key players," Mannelly said. "And the reason it’s becoming increasingly attractive, if you step back and you think about the megatrends in terms of health and wellness and you think about self-medication and how important that is going to be moving forward, it has very good long-term trends for the OTC business. Also if you look at the retail landscape and you think about OTC products and their availability in the retail landscape today versus five years ago, it has increased. And I think we’re going to see that happen again over the next five years as well," he said. "[OTC] continues to attract interest from the large pharma companies and the large CPG companies. The reason … is steady, slow predictable growth, very high gross margins, EBITDA margins and very significant free cash flow."

Mannelly fully expects M&A activity in the OTC sector to continue. "If you look at history in the consolidation and the acquisitions that have happened … it has created M&A opportunity," he said, including newly formed companies looking to shed non-core brands from their portfolios. 

Prestige’s acquisition of Insight, which is expected to close later this year, brings to Prestige’s portfolio the company’s first $100 million-plus brand in Monistat. According to IRI data for the 52 weeks ended Dec. 29, Monistat generated more than $135.8 million across total U.S. multi-outlet channels.  

"The keys with that brand and with that portfolio are similar to what we have done in the past with other acquisitions and that is we need to increase the brand support, we need to focus on new product development in order to capture the long-term value of that brand equity of Monistat," Mannelly said. 

Prestige reported fiscal fourth quarter net revenues of $144.3 million, a decrease of 6.6% over the prior year. Reported net revenues for the fiscal year ended March 31 were $601.9 million, a decrease of 3.5% over the prior fiscal year’s revenues of $623.6 million. Behind the decline was an incredibly soft cough-cold season. "If you recall, not this last season, but the season before we had the strongest cough/cold incidences in 10 years," Mannelly said. "This year, as I said, for the first half of the season we had the weakest cough/cold incidents in 15 years and it was weak in the last quarter as well."

 

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Former chairman of Federal Reserve System to address NACDS Total Store Expo

BY Antoinette Alexander

ARLINGTON, Va. — The National Association of Chain Drug Stores announced that Ben Bernanke, chairman of the Federal Reserve System from 2006 to 2014, will address the NACDS Total Store Expo during the morning Business Program on Aug. 24 at the Boston Convention and Exhibition Center in Boston.

“When you think about who’s best to forecast the nation’s economic and business climate, Dr. Bernanke is hands-down the leading authority,” stated NACDS president and CEO Steve Anderson.  “During his time as chairman of the Federal Reserve, Dr. Bernanke’s financial expertise has led the nation through some of its most challenging financial times, and as our industry continues to evolve and change, we look forward to listening to and learning from his experiences.”

Bernanke served two terms as chairman of the Board of Governors of the Federal Reserve System from 2006 to 2014.  Before his appointment as chairman, Bernanke served as chairman of the President’s Council of Economic Advisers. He also served in several other roles within the Federal Reserve System, including a member of the Board of Governors of the Federal Reserve System.  Currently, Bernanke is a Distinguished Fellow in Residence at the Brookings Institution.

 

 

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