According to a report by Forbes, “Global healthcare major Abbott Laboratories has agreed to acquire Russian pharmaceutical company Veropharm for between 13.6 billion and 17 billion rubles ($395 million – $495 million) in an all-cash deal. Veropharm is one of the leading generic drug manufacturers in Russia and the deal is likely to give Abbott a manufacturing presence in the country, where it has been operating since 1978.”Abbott will actually acquire Veropharm’s parent company, Garden Hills LLC, which owns about 80 percent of Veropharm’s business. Once the deal is complete, Abbott will own approximately 95 percent of the Russian company. This could increase deal’s worth to the higher valuation of $495 million.
Analysts cite Abbott’s waning generic drug sales and Russia developing market as two major reasons for the deal. The company has already worked to increase its presence in other global manufacturing hotspots such as China and India.
As for the reason Abbott chose Veropharm specifically, Market Watch states: “Veropharm is one of the largest Russian pharmaceutical manufacturers. The company’s production facilities comprise three pharmaceutical manufacturing sites in Pokrov, Belgorod and Voronezh. The company’s product portfolio includes over 100 pharmaceutical products. Veropharm employs more than 2,000 people.”
According to other reports, Abbott plans to use Veropharm’s Russian manufacturing facilities to develop more drugs, increasing its product line. In addition to pharmaceuticals, Abbot sells healthcare devices. It’s like the company will use the extra facilities to produce these items, as well.
Post-acquisition, Abbott plans to join manufacturing in Veropharm’s current facilities, as well as a new Russian plant that’s already in development.
Fox Business notes, “Abbott’s purchase is the largest acquisition by a U.S. company in Russia since Philip Morris International Inc and Japan Tobacco Inc in December announced plans to buy stakes in cigarette distributor Megapolis for $750 million each.”
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