Brazil beckons to Belgium

BRUSSELS, Belgium—Global pharmaceutical Euronext Brussels(UCB) and Sao Paolo, Brazil-based Meizler Biopharma have agreed to a strategicpartnership that provides UCB with 51 percent of the privately held company,along with undisclosed performance-related milestone payments and an option topurchase the remaining 49 percent at some point in the future. No furtherfinancial details are being disclosed.

UCB's role in this business endeavor is to bring parts ofits mature and new medicines into Meizler Biopharma's portfolio forcommercialization in Brazil, and fully consolidate Meizler Biopharma'sfinancial results under international accounting rules.

Meizler Biopharma specializes in the acquisition of newdrugs and existing partnerships with the world's leading pharmaceutical biotechand device manufacturers. Aimed at public and private institutions, hospitalsand clinics, Meizler Biopharma has full-service warehousing and distribution,dynamically structured to meet quickly, increasing government demand for hightechnology products at more affordable prices.

The agreement comes on the heels of a white paper releasedJune 21 by Paris, France-based Cegedim Relationship Management, outlining thecritical relationship between evolving Brazil, Russia, India and China (BRIC)healthcare climates and pharmaceutical markets, and the best strategies toboost growth in each of the emerging markets.

That's because the "stakes are rising for improvingcommercial performance in emerging markets," says the Cegedim report. "Fiveyears ago, emerging markets were responsible for just 5 percent ofpharmaceutical companies' profits; today, they make up 20 to 30 percent ofprofits. Shifts in the BRIC landscape will prompt companies to optimize theircommercial strategies with a better understanding of local markets and stakeholdernetworks."

Reporting on each of the BRIC pharmaceutical markets,Cegedim suggests, "Success in Brazil requires the cultivation of deeperrelationships with large drug distributors and physicians, while also capturingthe growing out-of-pocket and reimbursement-based segments."

"Our strategic partnership in Brazil with Meizler Biopharmais part of UCB's growth strategy. UCB's decision to partner with MeizlerBiopharma relies especially on their local infrastructure and Avi Meizler andhis team's experience and excellent reputation," says Roch Doliveux, CEO ofUCB. "Brazil is one of UCB's key markets in which the company did not have adirect presence, yet it is currently the seventh-largest biopharmaceuticalmarket worldwide and is growing fast. With Meizler Biopharma, we look forwardto building our presence in this region, creating a platform to launch UCB'snew products and making our medicines available to more patients."

Avi Meizler, the founder, CEO and principle shareholder ofMeizler Biopharma, said in a news release, "We are very happy with our newpartner UCB, which strengthens Meizler Biopharma and brings the advantages of aglobal biopharmaceutical leader including a strong R&D pipeline ofpotential new products. Knowledge and expertise-sharing between our teams willcreate a platform for growth to the benefits of patients living with severediseases."

Laurent Schots, senior project manager of UCB's MediaRelations Global Communications division, says the time to strike is when theiron is hot.

"The timing was actually right for both companies," Schotstells ddn. "UCB wanted to find a partnerin Brazil, the 'missing link' in UCB's emerging markets strategy. UCB was alsolooking for a partner aligned with our key therapeutic areas, central nervoussystem (CNS) disorders and immunological diseases. And finally, the company wasimpressed by the Meizler's strong management team, including Avi Meizler, whowill remain as chairman of the board."

Ironically, while UCB searched for a suitable partner,Meizler was looking for a strategic investor able to provide its company withassets and rights, Schots says.

"This is a strategic deal for UCB, as we wanted to ramp upour presence in this BRIC market," Schots says. "To give you an idea of the importanceof this market for us: In 2011, Brazil was ranked 7^th (up from 11^thin 2005) in the pharmaceutical market, representing more than EUR 21 billionrevenue and above-average growth. The Brazilian pharmaceutical market is one ofthe most attractive markets in the world, having experienced the fastest growthrates within Latin America. It has grown by a CAGR of 13 percent from 2006 to2010, and is expected to further grow by CAGR of 10 percent until 2015. By2015, Brazil is expected to rank fifth in the worldwide pharmaceutical market."

As a mid-sized company, UCB "is big enough to have the meansof its ambitions, but the nimbleness to move rapidly," Schots says. "The factthat UCB is totally focused in CNS and immunology gives us the capacity tocompete against bigger players. On top of this, our 'open innovation' modelallows us to find the best talents (from various organizations) to complementour own where needed—and truly collaborate

together. In this case (Brazil), UCB decided to integrateMeizler and join forces to enhance our presence in this key market. We stronglybelieve that Meizler was exactly what we needed to do so."

In the short term, the new company will be integrated intoUCB, meaning progressively, tools and ways of working will be harmonized andintegrated, Schots adds.

"Under IFRS, the new company will be fully consolidated inUCB's group financial reporting," he says. "Depending on the current contractsUCB has with third parties, some well-established products will be integrated intoMeizler's portfolio."