Zeneca takes full control of US cancer specialist
Friday 28 March 1997
The move, which comes some two years after Zeneca paid $204m for its initial half share in Salick, marks a further step in the British group's attempt to achieve world-leading status in cancer care and to broaden its attack on the wide health market.
A spokeswoman for Zeneca said: "Our drugs already target 7 cents out of every health-care dollar. With Salick we are attempting to get at the other 93 cents."
Zeneca, led by chief executive Sir David Barnes, has a strong portfolio of anti-cancer drugs, including the breast cancer treatment Zoladex, which increased sales by 28 per cent to pounds 333m last year. The company said Salick, headed by Dr Bernard Salick, offered "unique" direct access to information on cancer patients, both about the treatment being given to them and and how they were progressing. But the spokeswoman emphasised: "We are absolutely not trying to sell Zeneca drugs through Salick. Doctors prescribe the drugs most appropriate for the treatment."
Zeneca claims no other company offers as complete a service as Salick, which operates 11 comprehensive cancer care centres across the US, dealing with high-dependency long-term care. As well as cancer, it operates in the areas of kidney failure, organ transplants and certain immunodeficiency diseases.
Salick is in the midst of expansion in New York in association with Saint Vincent's Hospital there. The costs of that development programme helped to depress last year's operating profits to $10m from $12m in 1995, despite a 77 per cent jump in turnover to $186m.
The deal to buy in the remaining 50 per cent share is part of a put and call option negotiated in early 1995 at the time of the acquisition of the original stake in Salick, which is still quoted in the US. That arrangement allows Zeneca to buy out the remaining stake at $41.15 a share up until April 1999. Conversely, Salick's shareholders have the right in October this year to sell the holding at around $42 a share.
Zeneca refused to detail its plans for Salick once it acquires full control. The company merely said it would continue with "selective expansion and seek synergies with Zeneca". The British group is thought to believe that the Salick concept could work in overseas markets, including the UK, but there are no immediate plans to take it abroad while management has its hands full with expansion in the domestic market.
Earlier this month, Zeneca revealed that profits before exceptional items had broken through the pounds 1bn barrier for the first time, rising 15 per cent to pounds 1.01bn in 1996. Strong cash flow left the group with net cash of pounds 272m at the end of December. The group said it was more likely to use its balance sheet strength to buy in promising new drugs than to make acquisitions.
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