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Actavis strikes second deal

Icelandic generics firm buys increased market share in controlled-release drugs through purchase of Abrika

Actavis, an Icelandic pharma company, has agreed to pay $235m for US-based generics manufacturer Abrika Pharmaceuticals, which specialises in controlled-release (CR) products.

Under the terms of the deal, Actavis will make an initial cash payment of $110m and additional earn-out payments of up $125m, payable over the next three years subject to performance.

The deal is second acquisition by Actavis in as many weeks. Earlier, in November, the firm bought a majority stake in Russia's ZiO Zdorovje for $60m. Both purchases come just two months after it lost its bid for Croatia's Pliva to Barr Pharmaceuticals.

ìOur core objective for strategic acquisitions is to find opportunities that extend our product portfolio and pipeline, as well as broaden our platform for growth in core markets,î said Actavis president and CEO, Robert Wessman, commenting on the deal.

Actavis already has a foothold in the fast-growing, high-margin CR arena, which currently accounts for one-third of its total revenue. Following the deal with Abrika, Actavis will be one of the leading companies in the US in the development of CR products, with more than 50 drugs in the pipeline.

While Abrika currently has modest earnings with forecasts putting revenue for 2007 at $26m and $45m in 2008, Wessman is confident that the deal will boost Actavis' earnings, although he did not reveal specific figures.

Abrika, established in 2002, has a number of product filings and launches planned over the coming years, with at least three product expected before the end of 2007, with five-to-six launches in 2008.

While governments worldwide are determined to cut healthcare costs and many demand high-level use of generic products, generics manufacturers too are feeling the pressure on prices, leading many to look for economies of scale through mergers an acquisitions. Actavis can lay claim to more than 20 deals in recent years.

30th September 2008

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