A basket of pharmaceutical assets is up for sale in Brazil after both multinational and local laboratories revised their strategies, and as some plants show excess capacity. Together, these potential transactions could involve billions of reais in the medium term and, despite the recent correction in prices sought by sellers, the overall assessment is that available assets remain expensive.
According to industry sources, Rio Grande do Sul-based Takeda has put its Multilab laboratory up for sale. The transaction amount, excluding debt, ranges from R$90 million to R$100 million, well below the R$540 million the Japanese pharmaceutical company paid for Multilab in 2012. In Minas Gerais, Hipolabor hired a Brazilian bank to seek buyers willing to pay R$1 billion for the company.
There are also rumors involving different pharmaceutical and industrial units that supply both human and veterinary medicines that are awaiting a buyer.
TheraSkin, a maker of dermocosmetics, may have been put up for sale again for R$1 billion — according to a source, an R$800 million offer was turned down —, and Hypermarcas is allegedly looking for a partner, which the drugmaker denied “vehemently” a few days ago.
In the case of Multilab, sources said, the sales process is already underway and at least two investors have submitted non-binding offers to the foreign bank coordinating the transaction, likely to be completed in the short term.
One of the challenges to completing the sale more quickly, according to one of the sources, is related to regulatory problems with one of the lab’s main products: MultiGrip anti-flu capsules. On top of that, the company has a tax bill of R$120 million.
On the other hand, following the acquisition of Multilab, Takeda is said to have invested in the operation and modernized its São Jerônimo do Sul plant in Rio Grande do Sul. The decision to sell the asset, according to one source, is due to Takeda’s shift of focus in three strategic areas (gastroenterology, oncology and central nervous system), as well as to more vaccine research.
Multilab produces generic drugs, hospital medication, and over-the-counter drugs, which, according to another source, have not provided the return expected by the Japanese firm. Takeda Pharmaceutical, whose annual revenue totals around $16 billion, bought the Brazilian laboratory for a price considered high at the time — about 17 times EBITDA.
With the economic crisis and slow pace of growth in the pharmaceutical market, the industry’s assets are falling to “more real values,” according to source. Takeda said it did not comment on market rumors.
For industry sources, Takeda’s decision to sell the lab is similar to Pfizer’s decision to divest its stake in generic drug producer Teuto. In early July, the US multinational resold to the Melo family the 40% stake it had bought in the Brazilian laboratory in 2010 for R$400 million. The transaction value was once again well below the price paid for the asset.
Hipolabor, whose revenue amounts to R$500 million, also said it would not comment on market rumors. According to a source, the laboratory, specialized in the hospital segment, has been facing frequent suspension of its drugs by regulator Anvisa and has already been the target of investigations, the most serious of them for tax evasion, fraud in bidding, and adulteration of drugs in 2011.
On the other hand, the company has a plant that enjoys tax incentives in Minas Gerais, which could prove attractive during the sale process.
Another example of company shedding assets is Centroflora, the biggest Brazilian-owned manufacturer of extracts for phytotherapeutic drugs, which sold its nutraceutical division to Swiss giant Givaudan. The deal price was not disclosed, but the proceeds will help Centroflora move ahead with an investment program of up to R$95 million until 2020. The sale is expected to close in early 2018, and the companies will keep sharing a plant in São Paulo for up to five years.
The first stage of its investment plan includes transferring its research and development center to Campinas from Botucatu. The second phase will involve moving extract production to a new plant whose location has not been defined yet. Centroflora president Peter Andersen said the company wants to start building in the second half of 2018.
Mr. Andersen said Centroflora decided to split its business into nutraceuticals and phytotherapic drugs three years ago and is now focused on developing the latter. “Our big bet is on companies who want to develop those products and later the traditional extracts.”
Source: Valor Econômico