Divests operations in seven Western European countries
Actavis is selling its generics business across seven Western European countries to Indian firm Aurobindo.
As part of the deal, Aurobindo will acquire all of Actavis’ commercial infrastructure in France, Italy, Spain, Portugal, Belgium, Germany and the Netherlands.
Also included in the agreement are Actavis' existing products, staff and licence rights in those countries.
According to Actavis’ president Sigurdur Oli Olafsson, the move is intended to allow the company to prioritise investment in emerging markets in Central and Eastern Europe and Southeast Asia.
It also frees Actavis from several loss-making markets for its business, despite estimated net sales of €320m for 2013.
Olafsson said: "We believe that the value created by the commercial operations in these seven markets will be better maximised by Aurobindo, which will gain scale, additional products and enhanced competitive market share position as a result of this transaction.”
The agreement expands Aurobindo’s presence in Europe, which has been growing steadily in recent years.
The company was confident it was able to turn around the fortunes of the current loss-making Actavis businesses, claiming it "expects them to return to profitability in combination with [Aurobindo’s] vertically integrated platform and existing commercial infrastructure".
This includes Aurobindo's sown injectable and speciality portfolio, which the company says will be strengthened by the addition of Actavis’ readymade hospital sales infrastructure.
With this in mind, Aurobindo said it expects the acquired businesses to grow by 10 per cent year-on-year.
Contrary to a direction of travel that sees European firms aiming to expand by investing in markets in Asia and Latin America, India-based generics maker Aurobindo said its growth plans were firmly in the traditional European markets.
“We have been clear about our intention to focus on growth initiatives in Europe and international markets, which together are expected to be key drivers for future growth,” said V Muralidharan, SVP of European operations for Aurobindo.
“This transaction will complement our strategy of pursuing organic growth along with value-creating acquisitions within our served markets and adding complementary growth platforms to provide scale and revenue diversity,” he added.