Johannesburg – Partnering with reputable pharmaceutical multinationals will aid the credibility of Adcock Ingram Holdings [JSE:AIP] as the group explores business opportunities outside South Africa, CEO Jonathan Louw said on Thursday.
Adcock announced it had entered into a five-year strategic partnership with multinational drugs maker MSD - trading as Merck & Co - to co-promote and distribute a number of established MSD products.
The product range includes treatments for hypertension, cholesterol, asthma, migraine, dermatology and over-the-counter medicines.
As the second-largest pharmaceutical company in the world, Louw said MSD brings "incredible heritage" in terms of its research expertise as well as "credibility" into the partnership.
In return, Adcock brings in "a formidable marketing and distribution capacity backed by an excellent track record of delivery".
While the transaction will not materially enhance the companies' finances, both Adcock and MSD said the commercial value lay in their common goals, which will grow their footprint in emerging markets.
"This is the part of our [MSD's] overall strategy for emerging markets," said Stefan Oschmann, MSD's president for emerging markets.
"We expect sales from these geographies to be a key contributor to our future performance. As part of our pursuit of that growth, we will strive to expand our presence across these markets by actively seeking local collaborations."
Abdul Davids, an analyst at Kagiso Asset Management, said such partnerships were good because they are less risky compared to acquisitions.
"They provides immediate value, and enhance your profitability without you having to sacrifice your earnings or taking up debt for an acquisition," said Davids.
He pointed out that Aspen Pharmacare, SA's biggest generics manufacturer, has benefited handsomely out of its relationship with British multinational GlaxoSmithKline.
Since the failure to acquire Clipla Medpro, Adcock has shifted its focus to East and West African markets for acquisitions, while pursuing partnerships with multinationals to grow its product pipeline.
- Fin24.com