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Recordati acquires Orphan Europe

Recordati agrees to acquire Orphan Europe, a French pharmaceutical group specialising in rare diseases

Italian pharmaceutical company Recordati has agreed to acquire Orphan Europe (OE), a French company specialising in rare diseases.

The Italian pharmaceutical company will pay, at closing, EUR 135m, which will be funded predominantly from existing liquidity.

The transaction is expected to conclude by the end of 2007 and is subject to certain conditions, including clearance by the relevant anti-trust authorities. The Works Council of OE has already agreed to the purchase.

Orphan Europe employs approximately 120 people and has subsidiaries in nine EU countries and in the United Arab Emirates, as well as regional offices in seven countries. FY06 sales were EUR 40m with EBIT of EUR 7.6m.

OE markets ten products and has other orphan drugs in development. The company has in-depth knowledge of authorities and procedures, at both EC and national levels, to obtain the orphan designation, develop, receive marketing approval and distribute such products. It is one of very few EU specialists in the neonatal, paediatric and metabolic disorder fields.

OE operates a distribution network from a centralised unit located in Paris which serves patients throughout the EU and in many other countries worldwide. The company also has over 50 orphan drug specialists which operate out of 17 different countries in collaboration with a scientific and product support central team.

The OE acquisition includes the Orphan Europe Academy, which provides healthcare professionals with the opportunity to share and increase knowledge, develop new ideas, and strengthen scientific collaboration in the area of rare diseases.

Giovanni Recordati, CEO of Recordati, said: "The acquisition of Orphan Europe fits well with Recordati's growth strategy based on expansion and the strengthening of its product portfolio and pipeline. We believe that the market for drugs that treat rare diseases will grow significantly as a result of the identification of a constantly increasing number of rare diseases and the growing awareness which leads to more patients being diagnosed and treated.

"Orphan Europe represents a unique opportunity to strengthen our R&D capabilities and to establish even closer relationships with academic researchers and eminent scientists. Our increasing geographic coverage together with the additional expertise in handling highly specialised products should also stimulate our ongoing in-licensing activity," declared Recordati.

Future trends
While the identified future trend in the pharmaceutical industry is "personalised medicine" (targeted drugs for people with different genetic profiles), the high prices for such drugs are justified, companies say, due to high development and production costs, even if sales are small.

For example, for the treatment of infantile spasms with adrenocorticotropic hormone (ACTH), initial treatment lasts only a few weeks (though children often need more ACTH or other drugs later). Total cost for one treatment round is an average of USD 100,000 per child in the US, according to specialty pharmaceutical company Questcor.

Recordati's decision to buy OE obviously underscores the company's strategy to enter the niche pharmaceutical market for 'bespoke' and 'tailored' treatments. The move is certainly an unusual one for a major drug company. Most are trying to develop treatments for heart disease, diabetes and obesity - segments which include millions, if not billions, of patients.

With the OE purchase, Recordati is saying that in the long-term, specialising in this way now may somehow eventually open doors to other less-niche markets with expensive drugs. At a time where health technology assessments are biting and many healthcare structures are moving to primary care, the short-term gains are less easy to envisage.

30th September 2008


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