German generics company Stada has bucked the trend of other companies in the sector by selling off its US unit to DAVA Pharmaceuticals for around 31 million euros ($40m).
While other leading generics companies are busily buying up companies and products to expand their portfolios and geographic reach, Stada has decided to stage a calculated withdrawal from the US marketplace, at least for the time being.
The US operation had been compromised by “limited operative possibilities in the existing business structures and concurrently high price and margin pressures in the US generics market," Stada said, while adding that it would consider re-entering the USA if it identified a profitable opportunity there. The deal is expected to close in the third quarter of this year.
DAVA, based in New Jersey, is getting control of a business with sales of 7.9 billion euros in the first quarter of the year, accounting for around 2.6% of Stada’s group sales. Last month, Stada chief executive Hartmut Retzlaff also said the firm is planning to divest its 50% stake in Swiss generics firm Helvepharm.
The German company said it expects to post a pretax loss of 10 million euros and an after-tax loss of 5 million euros on the sale. DAVA will pay Stada $5 million on the closing date, a further $15 million after 18 months and $20 million after 36 months.
Meanwhile, Stada itself is the subject of perennial takeover speculation, from the likes of Teva, Wockhardt and Ranbaxy, because of its European presence and position in the emerging market for biosimilar drugs – substitutable copies of established biologics.
The German company recently filed for approval of a biosimilar - erythropoietin zeta for anaemia - and hopes for approval in 2007 with a peak sales forecast of 70 million euros a year.
Stada has maintained a fiercely independent stance, insisting that there was no need for a merger or takeover and that it would resist any hostile bid.