Russia's Pharmstandard is clearing the way for a proposed spinoff of its over-the-counter drugs unit--and clarifying the details for some skeptical investors.
In July, Pharmstandard announced that it would be spinning off its OTC unit, which had reportedly been for sale, and buying Bever Pharmaceutical, a Singapore API maker owned by a Pharmstandard board member. The moves mystified investors and sent shares tumbling. But recent announcements and statements from Chairman Viktor Kharitonin have shed light on Pharmstandard's intentions.
To make the OTC unit into a tidy package for spinoff, Pharmstandard plans to pay $590 million in cash and stock for Bever. That deal will give the OTC business a secure supply of ingredients for its flagship drugs, the anti-viral Arbidol and anti-anxiety med Aphobazolum. Kharitonin has said he would fold Bever into that unit if the deal goes through; it's up for a shareholder vote later this week.
Meanwhile, Pharmstandard is snapping up a minority interest in subsidiary Donelle Co., the Wall Street Journal reports, which in turn owns the company that makes Aphobazolum.
Though the company originally was expected to sell the OTC unit, Kharitonin said last week that that possibility, post-spinoff, is not out of the question.
There are plenty of multinational pharma companies who may be interested in the Russian OTC business, which controls the second-largest market share in the country. Novartis ($NVS), who holds the largest share with 8.2%, may be a candidate; both Sanofi ($SNY) and GlaxoSmithKline ($GSK) have also been active in buying up smaller business around the world in the consumer health space. And Merck ($MRK) CEO Kenneth Frazier has said Merck's consumer health business would have to grow to be worth the company's effort. Germany's Stada, who has shown previous takeover interest in Pharmstandard, could be in the mix as well.
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