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Meda buys out rival Viatris



11 August, 2005: Swedish specialty pharma firm Meda AB has acquired its larger German rival Viatris in a €750m deal.

The deal would further enhance Meda’s marketing potential in western European countries such as Germany, France, Spain and the Benelux region and would also complement Meda's Nordic operations to form a pan-European sales and marketing platform, said analysts.

Meda beat UCB of Belgium and Almirall of Spain who were reported to be interested as were Indian generics firms Ranbaxy Laboratories and Wockhardt in securing the deal.

The combined company would be “an attractive in-licensing partner with its pan-European organisation in marketing and sales, but also through its capacity in regulatory affairs and product development”, Meda officials said.

In one bold move Meda has moved into the first division of pan-European drug companies in terms of sales and marketing. They have the geographic representation they needed, there are good synergies and opportunities to sell each other's products, said Dominic Hollamby, global head, healthcare group at Rothschild, the investment bank that ran the auction in a statement.

While Meda had sales of SKr835m (£61.8m) in the first half of 2005 compared to Viatris's SKr1.875bn (£138m), the Swedish group had a higher operating profit before depreciation and amortisation.

Meda will pay €583m for Viatris shares and assume net debt, including pension provisions and similar obligations, of €167m.

Viatris has operations through its own affiliates in 14 countries with a strong focus on larger European markets. Sales in 2004 in the leading markets were; Germany EUR 63m, France EUR 62m, Benelux EUR 45m, Spain EUR 29m, Italy EUR 25m, Austria EUR 20m and Great Britain EUR 19m.

Viatris’ most important therapeutic area is respiratory. The company has developed and currently markets the patented Novolizer device, an innovative multi-dose dry powder inhaler. The rollout of the device and associated active substances gives the combined group significant organic growth opportunities. Viatris has successfully launched the active substance budesonide in Germany and has swiftly become the market leader.

The current European rollout is proving successful and the Novolizer is demonstrating rapid growth. Net sales during the first 6 months of 2005 were EUR 13.5m, an increase of over 130% compared to the same period last year.

Viatris has also a strong position in the therapeutic areas of pain/inflammation, which is also a core therapeutic area for Meda.

Meda had previously announced its intentions to establish marketing affiliates in certain larger European markets. The acquisition of Viatris achieves this aim immediately and provides Meda with a well established and respected marketing and sales infrastructure in each of these key countries.

There are substantial product cross selling opportunities. Meda’s main market is the Nordic area where Viatris does not have any subsidiaries. Product synergies are substantial as Meda’s products could now be marketed in several new markets whilst at the same time, Meda’s organisation can market Viatris’ products in the Nordic countries. The combined company will also get a good position in southern Europe.

Meda has no own production facilities as manufacturing is done by contract manufacturers. Viatris has modern production sites for inhalation products and tablet production. In addition, Viatris has capacity for pharmaceutical development which will improve the value of existing product portfolios of mature products.

The aim is to swiftly consolidate and rationalise the new corporate structure in order to quickly reach full benefits of the synergies. In parallel, marketing resources will be prioritised to achieve the highest growth opportunities within areas such as respiratory segments. The aim for the combined company is to reach an EBITDA margin of at least 25% already during 2007, analysts said.


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