Canada's Valeant Pharmaceuticals International has signed a binding agreement to buy PharmaSwiss, a privately-owned branded generics and over-the-counter  firm based in Zug, Switzerland.

The Mississauga-Ontario based group is forking out some 350 millio euros initially to seal the deal for PharmaSwiss, which has 38 million euros in cash and no debt. Up to an additional 30 million euros may be payable to certain stockholders of the latter (whose backers include include HBM BioVentures and Polish Enterprise Fund V)  based upon the achievement of certain milestones.

PharmaSwiss operates in seven therapeutic areas and 19 countries throughout central and eastern Europe, including Poland, Hungary, the Czech Republic and Serbia. It also has operations in Greece and Israel.

The Swiss firm has partnerships in place with some big-hitters, including Amgen, Astellas, Bristol-Myers Squibb, Eli Lilly and Pfizer, in-licensing products and marketing its own brands. Sales in 2010 reached 180 million euros, and this year should top 200 million euros, as revenues have been growing at 20% over the past five years.

Valeant says that its new partner offers regional expertise in such functions as regulatory, compliance, sales, marketing and distribution. PharmaSwiss' senior management team are all staying on and will work closely with the Valeant Europe team, which over time is expected to be combined under the PharmaSwiss corporate structure in Zug.

Valeant chief executive Michael Pearson said the acquisition "solidifies our position as a leading pharmaceutical company in Central and Eastern Europe". He added that PharmaSwiss has "an attractive partnering strategy as well as a complementary branded generics and OTC product portfolio that will strengthen our presence in the region".

PharaSwiss boss Pavel Mirovsky noted that Valeant's strong presence in Poland, the region's largest market, "fills an important gap and should contribute to transaction synergies". He went on to say that "the message we want to send to our employees, business partners and other stakeholders is one of continuity".

The transaction is expected to close in the first or second quarter and to be immediately accretive to Valeant.