Will have a leading position in the UK generics market
DCC Healthcare, a subsidiary of DCC plc, one of Ireland’s sales, marketing, distribution and business support groups, has agreed to buy Kent Pharmaceutical (Holdings) Limited (KPHL), a UK generic pharmaceuticals company for €71.2m (£58m). Completion of the transaction is conditional on approval from the Irish Competition Authority and is anticipated early this year.
DCC will initially pay €68.1m (£55.5m) in cash. In addition, up to €6.7m (£5.5m) may be payable to certain of the management shareholders dependent on the performance of the business over the next three years.
DCC Healthcare says the deal will significantly increase the scale of its pharma business, bringing in a complementary product portfolio, product licences and strong relationships in UK retail pharmacies. Combined the two companies will have revenues approaching €150m (£120m) and a leading position in the UK generics market.
The enlarged product portfolio and increased sales and marketing capability will generate significant growth opportunities
In the near term the enlarged product portfolio and increased sales and marketing capability will generate significant growth opportunities, the companies say. Over time the enhanced regulatory and business development capability will create opportunities to expand the product portfolio internationally, in particular within the EU, the Middle East and North Africa.
Kent Pharma has a broad portfolio of licensed products with a particular focus on beta lactam antibiotics including penicillin V, flucloxacillin and amoxicillin for treating bacterial infections such as throat, ear and respiratory tract infections. The firm also operates Athlone Pharmaceuticals, a specialist beta lactam manufacturing facility located in Roscommon, Ireland.
Kent Pharma sells mainly to retail pharmacies, hospitals, other generic pharma companies and international distributors. The business is headquartered in Ashford, Kent and employs around 304 people, of which 126 work in Roscommon. To 31 August 2012, the firm generated sales of €89.9m (£73.3m).
DCC Healthcare's portfolio encompasses a range of therapy areas
Mike Overy, KPHL’s chairman, said: ‘The shareholders believe this transaction provides a fantastic opportunity to continue the growth and development of KPHL with a partner that is committed to expanding in the generic pharmaceutical market both locally and internationally.’
DCC Healthcare‘s portfolio of own and third party pharmaceuticals encompasses a range of therapy areas including oncology, antibiotics, pain management, haematology, respiratory, addiction and emergency medicine.
Following the acquisition in May 2011 of the trade and assets of Neolab, a UK generic pharma business, DCC Healthcare has been growing its presence in the retail pharmacy channel in the UK and Ireland.
The company also provides outsourced pharma compounding services to hospitals in Ireland, which involves the aseptic filling of intravenous oncology, pain management, antibiotic and paediatric nutrition products into dosage forms.
Tommy Breen, CEO of DCC plc, said: ‘The acquisition of Kent Pharma is a material step forward for DCC Healthcare.
For some time DCC has believed that there is an opportunity to build a substantial pharma business prinicpally focused on established niche generic products
‘For some time DCC has believed that there is an opportunity to build a substantial pharma business principally focused on established niche generic products that are a number of years post patent expiry.
‘Such products are well positioned to benefit from the macro trend for healthcare systems to seek to meet the increasing demands of ageing populations with more cost effective healthcare solutions.
‘In addition, the pharma market is fragmented offering value-enhancing bolt-on acquisition opportunities, in particular where a strong platform has been established.’