Lilly eying deal with Turkish drug company

January 31, 2012

Eli Lilly and Co., GlaxoSmithKline Plc and Pfizer Inc. are among about a half-dozen companies interested in buying a stake in Mustafa Nevzat Ilac Sanayii AS in a deal that may value the Turkish drugmaker at $1 billion, three people with knowledge of the situation said.

The owners of Mustafa Nevzat, or MN Pharmaceuticals as the Istanbul-based generic drugmaker is known, have hired Bank of America Merrill Lynch to advise on the sale, said the people, who declined to be identified because the plans are confidential.

Mylan Inc. and Abbott Laboratories are also among the companies interested in bidding, they said. Merrill Lynch has sent so-called teasers to potential bidders, and non-binding bids have begun to arrive, one of the people said, adding that the process started late last year. Preliminary bidding may be completed within two months, one of the people said.

Two other Turkish pharmaceutical companies—Abdi Ibrahim Ilac Sanayi & Ticaret, the country’s largest, and Biofarma Pharmaceutical Industry Co.—have failed in efforts to sell stakes over the past two years. While Glaxo is seeking deals in emerging markets, it’s becoming harder to find acquisitions that make “financial sense,” CEO Andrew Witty said last year.

MN’s owners, the children and grandchildren of the founder Mustafa Nevzat Pisak, have yet to decide whether to sell a minority or majority stake in the closely held company, two of the people said. The owners are seeking a price that values the company at 15 to 20 times earnings before interest, tax, depreciation and amortization, or Ebitda, one of the people said.

Turkey has been a popular target for deals in recent years, with companies seeking to tap its $735 billion economy, which grew 8.2 percent in the third quarter of 2011, the fastest rate among the Group of 20 countries after China.

Zentiva NV, a Czech drugmaker bought by Sanofi in 2009, bought 75 percent of the generic-drug unit of Turkey’s Eczacibasi in 2007 for $613 million, and later purchased the remaining 25-percent stake.

Cengiz Sezen, MN’s chairman, and CEO Levent Selamoglu didn’t respond to e-mailed questions about possible talks or return phone calls seeking comment.

Glaxo, the United Kingdom’s largest drugmaker, is interested in acquiring a pharmaceutical company in Turkey as it struggles to become profitable in the country, the newspaper Hurriyet said Jan. 29, citing Abbas Hussain, the drugmaker’s emerging markets president. Sarah Spencer, a Glaxo spokeswoman, declined to comment on whether MN is a potential target. Spokesmen for Abbott, Eli Lilly, Mylan and Pfizer also declined to comment.

MN was the first Turkish pharmaceutical company to win a license from the Food and Drug Administration to sell products in the U.S., according to the company’s website. International companies sought to do business with Mustafa Nevzat since it acquired the FDA license in 2006, Selamoglu said in an interview Sept. 28.

The company’s products are largely injectable medications, Selamoglu said. They range from antidepressants to diabetic treatments and antipsychotic agents, according to its website.

Eli Lilly and MN were in negotiations that had reached an “advanced stage” to sell drugs in 26 countries in South America, Asia, Europe and Africa, Selamoglu said at the time.

MN generates annual revenue of about $250 million by selling about 100 million boxes of its products in Turkey, Selamoglu said. The country’s drug market was $9.2 billion in 2010, according to the website of the Istanbul-based Pharmaceutical Manufacturers Association of Turkey.



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