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Spin Off OTC Unit in Pharmstandard's Vision as it Buys API Supplier

By Dan Stanton , 14-Aug-2013

Pharmstandard says the acquisition of Bever Pharmaceuticals will lower the cost of its API supply as it plans to spin out an OTC business.

The Russian company announced on Tuesday it intends to shell out $590m (€445m) to buy Bever, the Singapore registered company who currently supplies Pharmstandard the active pharmaceutical ingredients (APIs) for two branded over-the-counter drugs (OTCs).

The potential purchase will support the manufacture of Arbidol and Aphobazolum, two of the firm’s topselling OTCs, Irina Bakhturina of Investor Relations at Pharmstandard told in-Pharmatechnologist.com.

“The APIs are actually produced in Italy by a third-party manufacturer who has an ongoing deal with Bever,” she said, “and by acquiring Bever we will continue the deal with the API manufacturer that will allow supply of the APIs at a much lower price.”

Arbidol was Pharmstandard’s topselling brand, according to the firm’s first half 2013 results, with sales of RUB 1,136m ($34m) up from RUB 651m last year, and represented 12% of the firm's total revenue.

Spin-Off OTC Business

“By acquiring Bever we intend to incorporate it into a new spin-off OTC company,” Bakhturina told us.

Plans to separate the OTC business were first announced in July, with the firm intending to go public and list on the Moscow Stock Exchange.

However, initial response was subdued due to the company refusal to disclose key information, Reuters reported , with VTB analyst Ivan Kushch downgrading the company from ‘hold’ to ‘sell.’

“The purpose of the reorganisation is unclear,” he told Reuters, “as is management's strategy with respect to post-reorganisation operations.”

Pharma 2020 and APIs

Russia’s Pharma 2020 strategy  – first conceived by then President Vladimir Putin in 2009 – intends to boost local drug manufacturing through a series of protective measures, ruling that 70% of all drugs must be manufactured on Russian soil by the end of the decade.

However, Bakhturina confirmed, this legislation only concerns formulated drugs. At present “no one regulates the APIs” in Russia, and therefore Pharmstandard can continue to import the APIs from Italy.

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