Canada’s Valeant Pharmaceuticals has agreed to buy Egyptian drugmaker for $800m as part of an expansion into the Middle East and North Africa (MENA) market.
The agreement with Amoun’s parent company Mercury (Cayman) Holdings includes a manufacturing facility just outside Cairo and is one of the largest acquisitions of a pharma company in the MENA region.
Amoun is the largest domestic drugmaker in Egypt and expects to achieve sales of 1.75bn Egyptian pounds (around $225m) in 2015, with growth of around 20%, focusing on drugs for high blood pressure, anti-infectives and diarrhoea drugs, amongst others.
“Valeant intends for Amoun to serve as a platform for further expansion in the MENA pharmaceutical market and expects the transaction to close in the third quarter, subject to customary closing conditions,” said the Canadian company in a statement.
The company has made emerging markets one of the growth platforms for its business, and reported double-digit increases in sales growth almost across the board in its first-quarter results statement.
Valeant’s move reflects an increased interest in the Egyptian pharma market among overseas manufacturers, stemming from greater uptake of health insurance among the public and as a consequence improved access to medicines.
The Egyptian pharma market – valued at around $3.25bn last year according to data from BMI Research – has been growing at a healthy rate despite the political instability as well as logistical problems facing domestic manufacturers such as chronic electricity and fuel shortages.
All told, MENA countries accounted for around $38bn of the global $1,081bn pharma market last year – around 3.5% – with market development held back by political turmoil in the wake of the Arab Spring and war in Iraq and Syria, as well as the deflating oil prices that have affected government purchasing power.
Chairman of Valeant and its CEO J. Michael Pearson told investors earlier this year that emerging markets are always volatile, adding that while he expects overall growth of around 10% a year “there will be big fluctuations quarter to quarter.”
However, the company is expecting emerging markets to account for around 20% of its total this year, with Eastern Europe, Africa and the Middle East contributing half of that.
“The Middle East and North Africa is going to be a great market,” he said back in April, in a preamble to the latest deal. “These countries continue to get wealthier and healthcare continues to increase as a percent of GDP.”
The acquisition comes after Valeant paid more than $11bn to buy Salix – a deal which closed in April – and after it was thwarted in its attempt to takeover Allergan, which subsequently joined with Actavis.