Can $6 Billion Brazilian Ache Buy Help Sooth Big Pharma's Financial Flu?

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Reported by Annette Kreuger, Industrial Info Resources (Sugar Land, Texas)--Two Big Pharma players are reportedly circling Brazil's privately owned Ache Laboratorios Farmacerticos, armed with bids estimated to range from $4 billion to $6 billion. Attractive for its top placement in the burgeoning Brazilian pharmaceutical market, Pfizer Incorporated (NYSE:PFE), Novartis (NYSE:NVS) and Abbott Laboratories (NYSE:ABT) are apparently bidding against each other to grab Ache.

The majority of Ache stock is owned by three families, two that apparently want to sell--the Baptistas and the Siaulys--and one, the Depieries, who reportedly do not. Acquiring Ache would give the winning bidder a solid base to grab a sizeable portion of consumers in one of the top "pharmerging" countries, as the industry looks beyond North America and other mature markets for growth. While Ache is not the largest drugmaker in Brazil, it is No. 1 in prescription drug sales and has a healthy over-the-counter (OTC) division.

The imbalance between new products and patent losses remains one of the main factors limiting pharma growth to single-digit territory in mature markets. While there is an abundance of product launches on the horizon and promises from regulatory officials to help streamline the process of getting new drugs on the market, the ongoing battering of profits caused by patent losses has taken its toll. The industry has had to call into question absolutely everything regarding the manner in which companies operate their businesses and the best road to take for future growth.

The "pharmerging" markets cannot be ignored, and are a key component of every drug major's new game book. Brazil, Russia, India and China (the BRIC countries) are joined by other emerging sectors as offering the potential for the industry's double-digits of yesterday. If the growth and return on investment (ROI) has not been as meteoric as first expected, it is there. As these new markets continue to establish government initiatives for health care (when none existed previously), and as there is the emergence of new middle-class populations, the simple laws of supply and demand come into play--much like the now mature markets that the U.S. and Europe experienced back in the 1950s, launching an industry that grew to unimaginable proportions.

None of the parties involved will discuss the possible sale of Ache, not even to acknowledge that offers are being considered. International investment banking firm Lazard Limited is reportedly handling any negotiations, alleged or otherwise, for the families.

For more Industrial Info coverage of the Pharmaceutical and Biotech Industry, visit our 2013 Pharmaceutical & Biotech Industry Outlook page. Industrial Info also will be exhibiting at the upcoming INTERPHEX trade show. Please visit us in New York City on April 23 to 25, at Booth #2476.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.