In late June, Russia's Pharmstandard was reportedly considering a sale of its OTC business. A couple of weeks later, the company said it would spin the unit off instead. But the fate of that business is still up in the air, with a sale to another drugmaker still a possibility, Chairman Viktor Kharitonin tells Bloomberg.
The spinoff announcement, along with a notice that the company was zeroing in on a buyout of Singapore-based Bever Pharmaceutical for up to $630 million, puzzled investors and sent shares into a tailspin. Some accused Kharitonin of plotting to take Pharmstandard private.
A sale of the nonprescription unit would have made sense for Pharmstandard--and for a Big Pharma company looking to capitalize on Russia's emerging market growth. Pharmstandard's OTC business is valued at $2.5 billion, and as Bloomberg reports, it controls the second-largest market share in Russia, coming in behind only Novartis ($NVS), which has 8.2%.
According to Kharitonin, that possibility is still open. "Selling to a strategic investor is one option," he told Bloomberg. "But the OTC unit could remain with us for a long time. If it's sold off to a strategic investor, it's clear that only a major player will be able to afford such a deal."
Kharitonin said the company's execs were "very surprised, even shocked" by the negative feedback to the deal plans revealed last month. The company had offered to buy out at a discount any shareholders who objected. "We're giving investors a choice: whoever wants to can participate in both companies, whoever doesn't can sell their shares in one or both companies," he told Bloomberg.
The company has since shed a bit of light on its deal for Bever, which is owned by Pharmstandard board member Alexander Shuster. Bever owns the rights to sell APIs for some of Pharmstandard's OTC meds. If shareholders approve the buyout at a meeting Aug. 17, Bever's business will be folded into the OTC unit. At a follow-up meeting in September, shareholders will vote to determine the fate of the OTC unit. If a spinoff is approved, the unit will be listed as a separate company during the first quarter of 2013, Pharmstandard has said.
That's when an opportunity for a multinational pharma company might come along again. Russia's government requires drugmakers to team up with local companies and share technology with them if they want free access to the country's fast-growing market. Pharmstandard has attracted buyout buzz in the past from Germany's Stada. Companies the likes of Amgen ($AMGN) and Pfizer ($PFE) have also showed interest in Russian expansion, with both listed in June among reported suitors for biosimilar developer Biocad.
- get more from Bloomberg
Special Report: Top Biopharma M&A Deals - 2012