Valeant (TSE:VRX) has formally acquired Egypt’s Amoun Pharmaceutical for US$800 million.
Amoun Pharmaceutical is one of the most important laboratories in Egypt with revenues of 1.75 billion Egyptian pounds (C$210 million) according to a statement from the Laval, Quebec based Valeant.
Through Amoun, Valeant has gained access to one of the fastest growing pharmaceutical markets in the world. The Egyptian company has experienced an annual sales growth of around 20% thanks to one of the largest and most sophisticated production centers in the Middle East and North Africa region (MENA).
Amoun’s product portfolio of is focused on the treatment of diarrhea and hypertension, and the production of antibiotics all of which are in high demand throughout MENA.
The acquisition, which was made through the Cayman Islands based holding company Mercury, which controls Amoun Pharmaceutical, is expected to close in the third quarter of 2015.
Valeant’s shares were trading 1.49% lower in Toronto in the early afternoon.
Valeant, which is one of the largest drug makers in the developing world, also specializes in the production, distribution and export of pharmaceuticals for animal consumption.
With strong agricultural growth in many African countries thanks to the adoption of mineral fertilizers and other efficiency improving techniques, the market for veterinary focused products is set to sharply increase and Amoun would give Valeant a strong base from which to address this demand.
Pharma companies have sought to expand research and manufacturing facilities in emerging markets to reduce costs. Egypt, despite its political challenges, has seen some of the highest pharmaceutical sales among emerging markets in recent years.
After three years of political and economic instability, Egypt is trying to resume growth, which could reach 4% in 2014/2015 with a set target rate of 7% in 2018. The government intends to achieve this through by attracting investment from other countries in MENA, notably Lebanon, as well as from Europe, North America and Asia.
Egypt is home to the largest pharmaceutical manufacturing industry in MENA countries, occupying a 30% market share, and it continues to wanting to increase its production capacity.
According to a study by the Oxford Business Group, the Ministry of Investment announced the construction of 76 new manufacturing facilities in hopes of raising exports, which rose from 10 to 20% per year over the last five years, and achieve a US1 billion sales target in 2015.
Multinationals GlaxoSmithKline, Novartis and Pfizer all have a presence in Egypt.