Genepharm strengthens hold on Australian generics market
Genepharm Australasia (GAA) is to buy Douglas Pharmaceuticals Australia for AU$70m in a move that will see the company expand its presence in the $1bn-rated Australian generics market.
Genepharm Australasia (GAA) is to buy Douglas Pharmaceuticals Australia for AU$70m in a move that will see the company expand its presence in the $1bn-rated Australian generics market.
"The acquisition will create a melding of two similar cultures focused on execution of strategy that delivers outcomes for customers, patients and shareholders," said Dennis Bastas, ceo and md of Genepharm. "Genepharm's effective sales and marketing model should increase the sales of Douglas" products and the acquisition will also deliver significant back office synergy benefits in warehousing and distribution, as well as general and administration costs."
Douglas Pharmaceuticals, a wholly owned subsidiary of Douglas International Holdings, achieved $55m revenue in the year to 31 March 2006. The deal, which will likely be made up of $55m up front and a $15m convertible note, will see Douglas International Holdings retain an option to become a minority shareholder in GAA. The wider operations of the Douglas Pharmaceuticals Group in New Zealand and elsewhere will remain unchanged.
Genepharm will fund the acquisition through an $11.4m share placement and a two-for-three renounceable rights issue, which is underwritten to $48.6m.
"The transaction represents an exciting opportunity for Douglas and creates an ability to partner with a company which is committed to rapidly expanding it's presence within the Australian generic pharmaceuticals market," said Mr Graeme Douglas, founder and md of Douglas Pharmaceuticals.
Douglas Pharmaceuticals began trading in Australia in 1989 with its primary focus on infant nutritional products supplemented with a small range of generic products. In 1996, following the Australian Government's introduction of a brand substitution scheme on 1 December 1994 that allowed pharmacists to supply generic brands of certain medicines to patients regardless of which brand the doctor prescribed, Douglas Internation Holdings disposed of its Nutritional business and shifted its focus towards generics.