Specifar a special catch for Watson

Acquisition brings significant European commercial presence

Kelsey Kaustinen
PARSIPPANY, N.J.—Watson Pharmaceuticals Inc. and SpecifarPharmaceuticals SA recently announced that Watson has acquired Specifar, aprivately held, multinational generic pharmaceutical developer, manufacturerand marketer, for $562 million in cash and certain contingent considerations.
 
 
The transaction was funded by cash on hand, as well asborrowings from Watson's revolving credit facility, and was signed and closedsimultaneously. The former owners of Specifar stand to receive additionalconsideration based on future profits of esomeprazole tablets during the drug'sfirst five years of sales, up to $56 million. Watson expects the deal to beimmediately accretive to non-GAAP earnings for 2011.
 
 
"We are very pleased that Specifar has become part of our globalorganization. We look forward to working with the management team to continueSpecifar's growth and to expanding the opportunities for success within Watson,"said Paul Bisaro, Watson's president and CEO, in a press release about theacquisition, adding that the "strategic significance of this combination issubstantial."
 
 
The acquisition expands Watson's commercial presence inEurope with Specifar's portfolio of approved products, particularly with thepresence in the $8.5 billion Greek market that Specifar's branded genericsoffer. Charlie Mayr, senior vice president of corporate affairs at Watson,notes that Specifar's European presence, arguably the strongest factor of theacquisition, adds to the breadth of Watson's own European generic business, inkeeping with the company's long-term strategy. Specifar's "high-quality R&Dand regulatory team" is another strong aspect of the deal, says Mayr, addingthat Watson envisions Specifar "becoming an R&D and regulatory center ofexcellence for the EU region and for Watson."
 
 
Specifar was established in 1933, and was granted its firstmarketing authorization on a foreign market in 2003, according to the company'swebsite. Currently, the company has obtained more than 600 marketingauthorizations, in Europe, Canada, South Africa, Asia and the Middle East. Thecompany's annual revenue for 2010 was about $120.7 million, with itsdevelopment business accounting for more than 70 percent of total revenues.
 
 
"The development business is well regarded within theEuropean pharmaceutical community for its strong R&D and regulatoryexpertise, including a successful track record of being prepared to launch atpatent expiry and for Specifar's highly reliable supply and quality ofproducts," says Mayr.
 
Specifar ranks in the top five in the Greek branded-genericmarket, and its portfolio of more than 30 products includes drugs for diabetes,the immune system, oncology, osteoporosis and the central nervous system, amongothers. Its pipeline also contains esomeprazole, a generic tablet version ofNexium that could launch in Europe as early as Q4 in 2011. In addition,Specifar also markets its products in Greece under the Alet Pharmaceuticalsbrand. The company's generic manufacturing takes place in its Athens-basedfacility, which has an annual capacity for about 1 billion doses, and a newfacility, which will be able to produce an additional 3 billion to 5 billiondoses, is under construction outside of Athens.
 
"Greece's generic product utilization is currently one ofthe lowest in Europe, providing us with a significant opportunity to capitalizeon growth in this market," said Bisaro.
 
Mayr adds that "Specifar Greek's commercial business hasminimal exposure to the government and reimbursed hospital sector, andconsequently has limited exposure to the macroeconomic conditions that arecurrently impacting Greece."
 
Watson's initial goal, he says, "is to integrateSpecifar as quickly as possible into Watson's global business, to maximize themany benefits that Specifar brings to us."
 
 
"There is virtually no overlap between our companies, and weanticipate the integration process will be quick and efficient," Mayr states."We are gaining a top-quality management team with knowledge of many marketsaround the globe."
  
Watson was advised by Jeffries & Company Inc. for theacquisition, and Specifar was advised by Rothschild and Eurobank EFG.

Kelsey Kaustinen

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