Valeant Pharmaceuticals weighs sale of Egyptian drugmaker Amoun Pharmaceutical

10 Jun 2016

Canada's Valeant Pharmaceuticals International Inc is mulling to sell Egyptian drugmaker Amoun Pharmaceutical Co in order to reduce debt, Bloomberg yesterday reported, citing people with knowledge of the matter.

Valeant, based in Ontario, has hired Goldman Sachs Group for the sale, which is at a preliminary stage, the report said.

Amoun may attract pharmaceutical companies who are keen in expanding in emerging markets, as well as the company's current executives could also pursue a management buyout with help from financial investors, the report added.

Valeant last year acquired privately held Amoun Pharmaceutical for about $800 million in order to further expand in the broader Middle East and North Africa pharmaceutical market. (See: Valeant to buy Egyptian drugmaker Amoun for $800 mn)

Founded in 1998, Amoun is the largest pharmaceutical company in Egypt with annual growth of approximately 20 per cent.

Amoun was acquired by the private-equity arms of Capital Group, Concord International Investments and New York-based Rohatyn Group in 2006 for about $450 million.

Amoun operates a large, state-of-the-art manufacturing plant that is considered to be one of the largest pharmaceutical facilities in Africa and the Middle East. It has market leading pharmaceutical brands in therapeutic areas such as anti-hypertensives, broad spectrum antibiotics and anti-diarrheals.  

Valeant, one of the most aggressive acquirers in the pharmaceutical industry, has been mulling the sale of some assets in order to reduce its massive $30-billion debt.

The company had held talks with investment banks that include Goldman Sachs Group and Centerview Partners to look at strategic options and sought advice on dealing with its creditors, Reuters reported in April.

Valeant is exploring the sale of Obagi Medical Products, the dermatology company it acquired in 2013 for $375 million, Provenge, a prostate-cancer vaccine it bought from Dendreon early last year as part of a $495 million deal, and heart treatment drugs, including Nitropress and Isuprel, it acquired last year from Marathon Pharmaceuticals for $350 million.

Valeant was earlier criticised for raising prices of Nitropress and Isuprel by 212 per cent and 525 per cent respectively immediately after acquiring these already-established drugs.

The company's stock soared for several years under its then CEO Michael Pearson's growth-through-acquisition strategy, which focused on buying older, niche drugs and repeatedly hiking prices. But the company's tactics eventually came under regulatory scrutiny.

The troubled drugmaker is under investigation by six US government agencies over price hike, its accounting practice, and alleged milking the US Medicaid system.

The Canadian Revenue Agency is also scrutinising the company's books, while investors in Canada and the US are suing the company for insider trading and misrepresentation.

The intense scrutiny of Valeant has triggered repeated sell-offs of company shares, which have lost nearly 90 per cent of their value since reaching peak levels last August.

Some analysts have said that Valeant is an Enron in the making, while others have said that the company is like a pack of cards just waiting to collapse.