União Química seeks new acquisitions in Brazil and abroad
União Química, one of Brazil’s largest drugmakers, is mulling new acquisitions in the country and abroad as part of its strategy to reach more markets, both in terms of therapeutic fields and geography, and to maintain a 20% growth rate in all of its businesses. Growing organically, via launches and sales expansion of the current drug portfolio, is also in the plans.Last year, the company, whose net sales grew 12.6% to R$3.8 billion, completed the purchase of nine brands and the hormones plant of Bayer Schering in São Paulo, expanding its presence in more than 30 countries and consolidating its leadership in oral hormonal contraceptives in Latin America."The acquisition will facilitate the entry of new products in these markets and accelerate our internationalization process," said Fernando de Castro Marques, owner and CEO at União Química. According to the agreement, the Brazilian drugmaker, in addition to keeping the nine brands and the factory in Cancioneiro, began to produce for Bayer medicines that were not sold in the package, such as the contraceptives Yaz and Yasmin.Although widely used in Europe and the United States, outsourcing of pharmaceutical production is less common in Brazil. Today, it represents a significant business for União Química, which supplies other Brazilian drugmakers and multinationals such as GSK, Novartis, and Zoetis. Last year, revenues from third-party production reached R$663.2 million, or about 15% of the total.According to Mr. Marques, it is possible to produce for the domestic market and export at the same time by acquiring modern factories with international certifications, as is the case with Bayer Schering.Discussions are ongoing and the drugmaker has funds for a potential acquisition in the short term. In addition to its own cash reserves, it issued R$600 million in bonds at the end of last year and this year secured a $65 million loan from the International Finance Corporation (IFC) - the support of the international institution is particularly relevant to the plans to start vaccine production in Brazil.For Fitch, União Química is likely to "maintain its credit indicators at adequate levels, with strong operating cash generation and leverage ratio below 2.5 times, even during the cycle of high investments that is expected to last until 2024." Last year, the company posted EBITDA of R$779.3 million, up 9.4%...
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