Sanofi-Aventis has boosted its presence in the emerging markets of Central and Eastern Europe by buying a quarter-stake in Czech-based pharmaceutical company Zentiva for 430 million euros ($515m).
Zentiva manufactures branded generic products and operates mainly in the Czech Republic, Slovakia and Romania – the latter secured via its ongoing, stepwise purchase of Romania’s Sicomed SA in which it now holds a 75% stake – and has started to expand into Poland, Russia and the Baltic states. It is ranked number three in CEE, with net profits of 65 million euros on revenues of 410 million euros last year and over 4,000 employees.
Sanofi-Aventis bought its 24.9% stake in part from private equity firm Warburg Pincus and partly from Zentiva’s managers and employees, and it is now the largest shareholder in the Czech firm.
Zentiva and Sanofi-Aventis said they have agreed to ‘review opportunities to use further Zentiva’s skills and marketing presence in CEE’ and also ‘look at ways to support the development of Zentiva’s business into new markets, by using Sanofi-Aventis’ pharmaceutical expertise and its much broader European presence’.
Although not a major player in the generics market, Sanofi-Aventis has established its own generics division, Winthrop Medicines, and said last year it plans to launch at least 30 generic medicines, including copycat versions of Sanofi-Aventis brands about to lose their patents.
IMS Health notes that global generics sales are about $35 billion annually, or less than 10% of the more than $450 billion global market for branded drugs. But this proportion is expected to grow at about 22% a year over the coming years, while branded-drug sales will grow in single digits.
Zentiva itself was created through the merger of the Czech company, Leciva, and the Slovak firm Slovakofarma, which was completed in August 2003. The two former companies began selling products under the Zentiva name from the beginning of September 2003.
The company sells 180 prescription pharmaceutical products and around 100 over-the-counter preparations, including dietary supplements, as well as cosmetic substances and active pharmaceutical ingredients (APIs).