Russia's Pharmstandard mulls selling OTC business: report

Pharmstandard, Russia's biggest drugmaker, is mulling the sale of its over-the-counter (OTC) medicines business, valued at $2.5 billion, Bloomberg yesterday reported, citing unnamed sources familiar with the matter.

Citigroup is advising Pharmstandard on the potential sale, which is at an early stage, the report said.

At $2.5 billion, the sale price is marginally higher than the $2.6 billion market capitalisation for the whole of the London-listed company.

Overseas pharmaceutical companies need to team up with local drug manufacturers in order to enter the lucrative and rapidly growing Russian market. Accordingly Germany's Stada had entered into merger talks with Pharmstandard in 2010.

Although the deal had the backing of the Russian government, Stada's shareholders had vetoed the deal fearing that the Russian partner would be too powerful for them.

Moscow-based Pharmstandard manufactures more than 250 pharmaceutical products including drugs for treatments of cardio-vascular diseases, diabetes, growth hormone deficiency, gastroenterological, neurological, contagious diseases, metabolic disorders, cancer and other diseases.

Its most popular drugs are Arbidol, Complivit, Pentalgin, Flucostat, Phosphogliv, Amixin, Afobazol, Rastan and Biosulin.

The company has eight modern plants spread across Russia with a total production capacity of more than 1.7 billion packs per year.

Pharmstandard posted net income of $297 million in 2012 on revenues of $1.6 billion, as sales of its OTC drugs fell 4.5 per cent to $451 million.