AGP Pharma Concludes Acquisition of Sandoz AG portfolio

July 30, 2021

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Pakistan’s Leading Pharmaceutical Company, AGP Limited has announced that it has concluded the acquisition of a portfolio of twenty-Two pharmaceutical Product brands from Sandoz AG, a Swiss Based company with Commerical Products in Pakistan.

For the purpose of Acquisition, AGP formed a Special Purpose Entity named OBS-AGP Pvt Ltd with sponsorship from Aitkenstuart Pakistan (Private) Limited (AGPs parent Company).

The acquired brands are expected to contribute More than PKR3bn in sales, with roughly PKR2bn expected to come from AZOMAX alone.

The acquired portfolio contains products including Azomax, Acemed, Amoxi-Clav, Ternelin, Zatofen, Ospamox, Dermazin among others.

AGP Limited has acquired the marketing and distribution of the Target brands from Sandoz Business Division, currently being handled by Novartis Pharma Pakistan Limited. Presently, the target brands are being manufactured through a toll manufacturing agreement with the majority of the brands manufactured at the facilities of GSK Pakistan Limited.

The same practice shall continue after the acquisition by AGP Limited through their SPV, OBS AGP (Private) Limited with only the marketing and distribution of the products being acquired from Novartis Pharma.

Moreover, under the agreement, for the first year and a half post-acquisition, the target brands shall continue to be distributed under the name of “Novartis Pharma Pakistan Limited, subsequent to which, the brands will be distributed and marketing under the name of “OBS AGP (Private) Limited.

As per the sources, the total acquisition cost is in excess of PKR3.5bn mainly funded by Debt (70%), which is the preferred source of funding for the AGP group.

AGP is one of the largest pharmaceutical companies in Pakistan, providing a broad range of pharmaceutical products. The operations of AGP include manufacturing, marketing, and sales of pharmaceutical and healthcare products in the domestic and international market. It operates in 8 major business units with over 135 variants and 58 products, including market-leading products like Rigix, Ceclor and Osnate etc.

While Growth is expected in sales with the acquisition of the Portfolio. However, the key risk remains that the Majority of sales (70%) are derived from Azomax which is in heavy demand owing to the COVID19 pandemic situation in the country.

However, with the COVID situation expected to be under control in 2022, Azomax sales are bound to decrease.

As per the company, with the acquisition, consolidated Sales are expected to be around PKR10bn in one year period. However, what remains to be seen is whether Azomax’s expected decline will tank the portfolio?