Actavis expands presence in Russia
Purchase of majority stake in Russian manufacturing facility strengthens position in fast growing market.
Actavis announced today that it has acquired a 51% controlling interest in ZiO Zdorovje, a leading Russian pharmaceutical manufacturer.
The total commitment by Actavis is EUR47 million (US$60 million), of which EUR23 million (US$30 million) will be made available for investment for ZiO Zdorovje's world class manufacturing site to introduce new products and create a platform for increased production and capacity. This investment combined with the 49% stake that the current owners of ZiO Zdorovje will retain in the business going forward, underlines how committed both parties are to working closely together going forward.
Strategic Rationale
Russia is one of the fastest growing markets in the generic industry with growth forecast at an annual rate of 15-17% during next 5 years. Russia is already Actavis' seventh largest market, accounting for approximately 4% of the Groups annual sales. Actavis is confident that this transaction will significantly enhance its prospects in the Russian market and establish a platform for sustainable growth going forward.
The transaction will enable Actavis to transfer production of certain products to Russia and provide the Group with a local manufacturing presence that will help to facilitate participation in state hospital tenders.
About ZiO Zdorovje
The company, established in 2001, is located in Podolsk (about 20 kilometers from Moscow) with 140 employees. Current capacity is approximately 2 billion tablets and capsules in addition to 20 million sachets a year. The factory is GMP (Good Manufacturing Practice standard) approved and is one of the first Russian manufacturers to get ISO 9001:2000 certificate (the quality management system).
The Company produces 12 generic medicines and sells mainly to state medical institutions and through the Russian federal reimbursement program, providing a solid revenue base. ZiO Zdorovje is forecasting revenues of EUR21 million (USD27 million) in 2006. In 2007, the Company is expected to have revenues of EUR31 million (US$40 million), with an EBITDA level in line with Actavis Group average.
Financing
The purchase consideration will be paid from Actavis' existing committed bank facilities.
Commenting, Robert Wessman, President and CEO of Actavis Group said:
"ZiO Zdorovje is recognized internationally as the owner of one of the best manufacturing plants in the Russian market. The Company has an outstanding performance track record which has earned it a strong reputation throughout the country. This transaction therefore represents an important milestone for Actavis' expansion in Russia by providing us with a local manufacturing presence, crucial for our continued growth in this market."
Commenting, Vladimir Ageev, General Director of ZiO Zdorovje said:
"This transaction unites two world class businesses to create a powerful new force in the Russian market. We believe that the combination of our local manufacturing expertise with Actavis' extensive product portfolio will significantly enhance the growth prospects for both businesses and we are very excited about working together."