Medeva beefs up France and US with pounds 258m buy

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The Independent Online
Medeva, the pharmaceuticals group, yesterday announced a large expansion in the US and France with the $400m (pounds 258m) acquisition of rights to drugs and other assets from Rhone-Poulenc Rorer, the US-owned French drug company.

The US assets were acquired by RPR when it took over Fisons last year and include the group's former US headquarters at Rochester in New York State. They were spotted by Medeva as under-exploited during its abortive merger talks with Fisons.

The deal is being part-financed through a pounds 109m placing, with existing shareholders being offered the new shares on a one-for-six basis at 220p. The move was well received by analysts, who said it would be earnings- enhancing. Shares in Medeva jumped 30p to 261p.

Bill Bogie, chief executive, described the two acquisitions as "Medeva's most significant step forward in terms of both its operations and its potential to deliver earnings growth for shareholders". He said the deal took the group's strategy on several stages.

It gave them critical mass in France and the US. In the former, Dr Bogie said the acquisition of rights to respiratory, dermatological and non- prescription drugs would allow Medeva to cover the cost of the existing sales force, the marketing spend that goes with it and help to support new product launches.

The deals also give the group Fisons' pennkinetic slow release technology, which can be applied to products within Medeva's development pipeline, such as its Hepagene hepatitis vaccine and anaesthetics acquired last year. That would help turn the group into a fully-fledged pharmaceutical company into the next century, Dr Bogie said.

But he described the 10 products being acquired with the Rochester business as "a classic Medeva opportunity". In the six years of its life, the company had been good at generating and re-generating growth in the products its owns, he said, and the Rochester products had not had the support they required to generate growth.

The main drug being acquired is Tussionex, a treatment for heavy coughs, which generated $31.5m of the $99.7m sales produced in total by the US products last year. Delsym, a slow-release cough treatment for children, Pediapred, a steroid for treating a range of allergic to inflammatory conditions, Zaroxolyn, for heart and kidney failure, and Ionamin, an appetite suppressant, are also coming aboard in the deal.

Operating profits from the US drugs have grown from $36.3m to $54.4m in the last three years.