Africa’s largest drug company and South African multinational giant, Aspen Pharmacare has struck a $1 billion deal with global pharmaceutical giant, Merck. Through the deal, Aspen will acquire a portfolio of 11 drug brands and a manufacturing plant from Merck, a move that will help bolster its presence in Europe, Latin America and Asia.
In a recent interview with the Financial Times, Aspen’s Chief Executive Officer, Stephen Saad said:
“The products fit very well with developing our target business: they are a niche areas such as steroids, areas where there is not much generic competition,” he told the Financial Times. “As we are developing as a group one of our strategic intentions is to look for differentiated products that are also products that will support our territories of strategic interest.”
“The active pharmaceutical ingredients are hard to source or replicate, and this allows us strong pipelines,” he said. “With the products bought, this should help accelerate our growth inemerging markets, especially Latin America and Asia Pacific,” he added.
The deal brings more than $602 million in additional annual sales to Aspen including $260 million from Merck’s products unit and 280 million euros from Merck.
Merck will continue to buy active pharmaceutical ingredients from Aspen under a 10-year supply contract. “I hope it’s the start of a broader strategic relationship,” Saad said.
Funding for the purchase is “all in place” and the money will come from new debt facilities, sourced in South Africa and abroad, he said. Deferred payments will be taken from the company’s cash and no equity will be used, he added.
Aspen’s shares rose more than 1 percent on the news. The deal is still subject to approval from various competition authorities.