Kazakhstan. Takeover of ChimPharm by Polpharma Confirmed
IHS Global Insight Perspective
Significance
ChimPharm, a leading pharmaceutical producer in Kazakhstan, has been acquired by Poland's largest pharma company, generics maker Polpharma, which is planning to invest an initial USD85 million in its new acquisition.
Implications
This is a significant event in the Kazakh pharmaceutical industry, and will help with its modernisation and expansion of its potential.
Outlook
With the Kazakh pharmaceutical market set to grow very dynamically in the next few years, Polpharma is likely to benefit from its planned investment in the country, while ChimPharm will benefit from a resourceful investor with considerable experience in the generics markets of central and eastern Europe and central Asia.
Polpharma Takeover of ChimPharm Confirmed
The acquisition of a majority stake in leading Kazakh pharmaceutical company ChimPharm (KhimPharm), based in Shymkent, by Poland's largest pharmaceutical company—generics producer Polpharma—has been confirmed in a press release distributed at a recent press conference dedicated to the takeover and the plans of the new owners regarding future investments. The financial details of the transaction are not revealed. Russian news agency Interfax reports the announcement by Wlodzimierz Gryglewicz, the chief executive officer (CEO) of ChimPharm, that over the next four years, the new owners will invest around USD85 million in the company.
GMP Upgrade and New Facility Planned
The source reports Gryglewicz's statement that the investment will involve the upgrading of ChimPharm's infrastructure and improving technological and manufacturing standards so that the company's production facility will be compliant with good manufacturing practice (GMP) standards. Additionally, the new owners will build a new facility in which medicines packaged in vials will be produced.
ChimPharm Products to Be Marketed Under Santo Brand Name
Jacek Glinka, the CEO of Polpharma, is reported by the source as saying that ChimPharm and Polpharma will combine the sales of their products and market them under the brand name "Santo—Member of the Polpharma Group". Glinka also stated that through the acquisition, ChimPharm will gain access to over 300 products already in Polpharma's portfolio, and 400 products being developed—mainly in the gastrological, neurological and cardiology therapeutic areas—as well as oncology and biotech drugs.
Polpharma to Start Producing Own Drugs in Kazakhstan
According to Gryglewicz, quoted in Polish industry news provider Biotechnologia.pl, ChimPharm has a 50% stake in drug production in Kazakhstan, and sells its products under the brand name Santo. The company has around 200 products in its portfolio, from 24 therapeutic areas. It plans to make sales amounting to USD70 million in 2011. Gryglewicz, who was himself previously employed by Polpharma, is reported by the source as saying that Polpharma's investment in ChimPharm will be part of the modernisation of the Kazakh pharmaceutical industry as a whole, and that once it has completed work on upgrading the company's facilities to GMP standards, Polpharma will start producing many of the products it already sells in Kazakhstan and other central Asian countries at ChimPharm's facilities. Additionally, the source reports Gryglewicz's statement that the USD85-million investment is only the "first phase" of investment by Polpharma in ChimPharm.
Outlook and Implications
Earlier in 2011, Polpharma's CEO confirmed that the company was planning to make two acquisitions during the course of the year, one of which was believed to be Polfa Warszawa, a major generics producer on Polpharma's domestic market of Poland (seePoland: 5 May 2011: Polpharma Plans for Regional Domination, Set to Make Several Acquisitions in 2011). The company has now acquired a majority stake in Russian drug maker Akrihin, as well as ChimPharm, so if it succeeds in acquiring Polfa Warszawa, it will have exceeded its acquisition plans (see Poland - Russia: 15 August 2011: Polpharma Takes Majority Stake in Russian Drug Maker Akrihin).
Having grown exponentially during the "golden years" of generics producers in Poland, Polpharma is now in an excellent position to make use of its very substantial financial potential to expand outside Poland—where the generics market is increasingly saturated and competitive—and into markets where there is considerable growth potential, such as Kazakhstan and Russia, to a lesser extent. Having supplied the former Soviet Union during the communist era, the Polish company has considerable experience of working on these markets, and is likely to succeed where other companies that do not have such experience might fail.
Considering the massive growth of Kazakhstan's pharmaceutical market and its predicted growth in the coming years, it is clear what the attraction in this investment is for Polpharma (see Kazakhstan: 26 April 2011: Kazakh Pharmaceutical Market Increases 28% in 2010). For ChimPharm, it has gained an investor with considerable resources and experience of the generics market in Central and Eastern Europe, as well as central Asia, which is also in the process of developing biosimilar products that over time could also become part of its portfolio.
Source: IHS
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