NZ pharma company may be up for sale

Last updated 05:00 03/08/2012

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Douglas Pharmaceuticals, the largest New Zealand-owned drugs manufacturer, may be up for sale.

The west Auckland-based company was founded in 1967 by Sir Graeme Douglas, winner of a swag of business accolades including in June being named a laureate in the Fairfax Business Hall of Fame.

It is understood an "information memorandum", prepared for prospective buyers when a company is in the process of raising capital or selling a company, was put out to the market this week.

Market sources say Douglas has been in exclusive sale talks with Canada's largest pharmaceutical company, Valeant Pharmaceuticals International, but Sir Graeme denied his company was being touted to the Canadian firm or anyone else "at this time".

In an email to BusinessDay, he said: "Douglas is not up for sale with the North American firm Valeant, either in complete or part, nor is the company being courted by them," he said.

The company, privately owned by the Douglas family, does not publish financial information but has said it had turnover this year of about $145 million, of which about $85m came from exports to more than 35 countries.

Sir Graeme also disputed market speculation valuing the company at between $240 million and $350m, based on a multiple of six to seven times earnings before interest, tax, depreciation and amortisation of $40m-$50m.

"The quoted earnings numbers are not correct and, as a private company, we do not disclose them," he said.

Sir Graeme, 83, remains managing director of the pharma company he founded but earlier this year said he doubted he would be with the company in five years. He also said he would be reluctant to see it sold.

His son Jeff, 53, joined the company when he was 20 and leads the sales and marketing functions of the company, including its export sales operations.

“I would like to think the company under other leadership would continue to progress,” Sir Graeme said in January.

“I wouldn't like to see it go, if for no other reason than I think it's good for New Zealand to have a good pharmaceutical company where we have this capacity to manufacture products.”

Last year, Douglas Pharmaceuticals produced more than 455m tablets, 270,000 litres and 31 tonnes of pharmaceutical medicines, liquids and creams.

After 10 years of trying to break into the lucrative United States market, Douglas Pharmaceuticals had its prescription acne medication isotretinoin approved by the Food and Drug Administration in January.

Sold in New Zealand as Oratane it is the group's biggest export product and is market leader in several countries. It will be sold as Myorisan in the US. The company was expecting two more FDA approvals within the next year.

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Sir Graeme was knighted in 2010 for services to philanthropy and athletics.

Valeant is listed on the New York and Toronto stock exchanges. Headquartered in Montreal, the company has offices and commercial facilities worldwide, including Australia.

The New Zealand Companies Office shows a Valeant Pharmaceuticals New Zealand was registered in May 2003.

With full year revenues in 2011 of US$2.46 billion ($3.03b), Valeant is at the lower end of the world's top 50 pharma companies.

According to its website, Valeant has been acquiring other businesses in the past four years.


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