Specifar a special catch for Watson
PARSIPPANY, N.J.—Watson Pharmaceuticals Inc. and Specifar Pharmaceuticals SA recently announced that Watson has acquired Specifar, a privately held, multinational generic pharmaceutical developer, manufacturer and marketer, for $562 million in cash and certain contingent considerations.
The transaction was funded by cash on hand, as well as borrowings from Watson's revolving credit facility, and was signed and closed simultaneously. The former owners of Specifar stand to receive additional consideration based on future profits of esomeprazole tablets during the drug's first five years of sales, up to $56 million. Watson expects the deal to be immediately accretive to non-GAAP earnings for 2011.
"We are very pleased that Specifar has become part of our global organization. We look forward to working with the management team to continue Specifar's growth and to expanding the opportunities for success within Watson," said Paul Bisaro, Watson's president and CEO, in a press release about the acquisition, adding that the "strategic significance of this combination is substantial."
The acquisition expands Watson's commercial presence in Europe with Specifar's portfolio of approved products, particularly with the presence in the $8.5 billion Greek market that Specifar's branded generics offer. Charlie Mayr, senior vice president of corporate affairs at Watson, notes that Specifar's European presence, arguably the strongest factor of the acquisition, adds to the breadth of Watson's own European generic business, in keeping with the company's long-term strategy. Specifar 's "high-quality R&D and regulatory team" is another strong aspect of the deal, says Mayr, adding that Watson envisions Specifar "becoming an R&D and regulatory center of excellence for the EU region and for Watson."
Specifar was established in 1933, and was granted its first marketing authorization on a foreign market in 2003, according to the company's website. Currently, the company has obtained more than 600 marketing authorizations, in Europe, Canada, South Africa, Asia and the Middle East. The company's annual revenue for 2010 was about $120.7 million, with its development business accounting for more than 70 percent of total revenues.
"The development business is well regarded within the European pharmaceutical community for its strong R&D and regulatory expertise, including a successful track record of being prepared to launch at patent expiry and for Specifar's highly reliable supply and quality of products," says Mayr.
Specifar ranks in the top five in the Greek branded-generic market, and its portfolio of more than 30 products includes drugs for diabetes, the immune system, oncology, osteoporosis and the central nervous system, among others. Its pipeline also contains esomeprazole, a generic tablet version of Nexium that could launch in Europe as early as Q4 in 2011. In addition, Specifar also markets its products in Greece under the Alet Pharmaceuticals brand. The company's generic manufacturing takes place in its Athens-based facility, which has an annual capacity for about 1 billion doses, and a new facility, which will be able to produce an additional 3 billion to 5 billion doses, is under construction outside of Athens.
"Greece's generic product utilization is currently one of the lowest in Europe, providing us with a significant opportunity to capitalize on growth in this market," said Bisaro.
Mayr adds that "Specifar Greek's commercial business has minimal exposure to the government and reimbursed hospital sector, and consequently has limited exposure to the macroeconomic conditions that are currently impacting Greece."
Watson's initial goal, he says, "is to integrate Specifar as quickly as possible into Watson's global business, to maximize the many benefits that Specifar brings to us."
"There is virtually no overlap between our companies, and we anticipate the integration process will be quick and efficient," Mayr states. "We are gaining a top-quality management team with knowledge of many markets around the globe."