With Western drugmakers sniffing around emerging markets in Latin America and elsewhere for the scent of a good deal, some companies there are weighing their futures, and their values, preparing themselves for the chase.
Ache Laboratorios Farmaceuticos, which is one of the largest drugmakers in one the most coveted emerging markets, Brazil, is doing just that. The word on the street, Reuters reports, is that Ache has hired investment bank Lazard to give it an assessment and that it could fetch a price in the billions of dollars.
Of course, buyout rumors are part of the stock in trade for pharma, but Brazil is a hot market and Ache a promising company. Reuters says sales of the privately held company were about $750 million in the 12 months that ended Sept. 30. And while that ranks the company only fourth among drugmakers there, it leads in prescription medicines and has developed its own branded products. In 2005, its anti-inflammatory Acheflan, made from a Brazilian plant, was the first in that country to be fully developed there.
Sanofi ($SNY) is already a player in Brazil, having picked up the generics drugmaker Medley in 2009 for $660 million. Sanofi has since expanded its footprint in Latin America with its announced acquisition last year of Genfar in Colombia.
The reason that Western drug companies are looking in emerging markets in Asia, Russia and Latin America is obvious. IMS Health says the global drug market should hit $1.2 trillion by 2016, but 16 "pharmerging" countries will take a much bigger bite of that total. It says sales in those countries--including China, Brazil, India and the other usual suspects--will account for 30% of worldwide drug spending by 2016, up from 20% in 2011. That happens as Europe's share will shrink to 13% from 17%, and the United States' to 31% from 34%.
Just this week, GlaxoSmithKline ($GSK) reported that its revenue from Europe in 2012 dropped 7% while revenue from emerging markets was up 10% and made up a quarter of new revenue growth for the company.
- read the Reuters story