Watson Acquires Specifar Pharmaceuticals
Watson Pharmaceuticals, Inc. and Specifar Pharmaceuticals S.A. today jointly announced that Watson has acquired the privately-held multinational generic pharmaceutical developer, manufacturer and marketer for EUR 400 million ($562 million) in cash and certain contingent consideration. As a result of the acquisition, Watson gains a leading generic product development company that develops and out-licenses products throughout the world. In addition, this acquisition enhances Watson's commercial presence in key European markets by providing a portfolio of approved products. The transaction also gives Watson a strong branded-generic commercial presence in the EUR 6 billion Greek pharmaceutical market. Specifar's pipeline includes a generic tablet version of Nexium (esomeprazole), which could launch in certain European markets as early as the fourth quarter of 2011. Under the terms of the acquisition agreement, Specifar's former owners could receive additional consideration based on future profits from this product.
Watson anticipates that the transaction will be immediately accretive to 2011 non-GAAP earnings.
Specifar, with annual revenue of approximately EUR 85 million for 2010, operates two core businesses. The Company is a third-party product developer, with approximately 400 marketing authorizations licensed to third parties for sale in 36 countries, predominantly in Europe. Specifar has eight products currently filed in the EU and additional products in development. The Company's development business, which operates internationally, accounts for more than 70% of total revenues.
The Specifar group is in the top five in the Greek branded-generic market, with a portfolio of more than 30 products, including internally developed and in-licensed products sold through a sales force of 170 employees. Specifar also markets products in Greece under the Alet Pharmaceuticals brand through a separate 55 representative sales force.
Specifar currently manufactures generic pharmaceutical products in a modern, EU-approved facility located in Athens with capacity for approximately 1 billion doses annually. A new state-of-the-art facility is currently under construction just outside of Athens. This facility will provide capacity to manufacture an additional 3 to 5 billion doses, further enhancing Watson's global supply chain. EU certification of the new facility is expected in mid-2012. This capacity will ultimately permit Watson to convert additional third-party manufactured products to own-manufactured.
"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.
"The strategic significance of this combination is substantial.
Watson will now have a powerful product development capability recognized throughout the industry for its strong track record of successfully launching products in key European markets, supported by an accomplished R&D and regulatory capability. The development business will continue to develop and market products to third parties under the Specifar name and now will also develop products for Watson's commercial groups worldwide. In addition, we intend to expand Specifar's development capabilities and create a center of excellence for product development in international markets. We also believe that Specifar's European management expertise and existing business relationships will support Watson's current and future commercial expansion in European countries.
"Watson also gains a substantial commercial position in the Greek branded-generic market where the Specifar and Alet brands currently rank in the top five, Watson can leverage its portfolio of products through these effective sales platforms. 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," Bisaro continued.
"Finally, the Esomeprazole tablet opportunity represents a significant upside potential for Watson. As there are certain variables surrounding this product, we have structured the esomeprazole opportunity as an earn-out allowing Specifar's former owners to participate in any potential commercial upside from this product," Bisaro concluded.