ECONOMY

Greece-based Specifar acquired by Watson Pharmaceuticals

Greece may have no money, but it still has an abundance of business opportunities, as the recent acquisition by US firm Watson Pharmaceuticals of Specifar, a Greece-based manufacturer of generic drugs, indicates.

The Vassilopoulos family, which had a 100 percent stake in Specifar, received 400 million euros in cash to hand over their shares to the American company, while it will also receive another 40 million over the next five years as a percentage of profits from the drug it developed called Esomeprazole, a generic tablet version of Nexium, used to treat acid reflux disease.

According to one market pundit, ?the American firm not only went ahead with a purchase in the middle of Greece?s worst economic crisis, but they made the acquisition by completely ignoring the country?s risk factor.? However, he added, Specifar was already an extroverted company, with some 80 percent of its sales made abroad, though this does not change the fact that it had its headquarters and production line in Greece. Watson, meanwhile, appeared determined to acquire the Greek company, as the deal took just six months to seal.

According to one executive close to the sale, ?it is unlikely that Watson?s interest in Specifar increased as the Greek crisis deepened.? In fact, said the executive, the American company was ready to pay 20 times more than the Greek company?s 2010 earnings before interest, taxes, depreciation and amortization (EBITDA). Specifar showed operational profits of 18.5 million euros in 2010.

According to market experts, Watson paid for three factors: The first is Specifar?s growth potential. From a 30-million-euro turnover in 2007, Specifar saw revenues of 85 million euros by 2010, while it is estimated that its sales will double within the next three years to reach 160 million euros.

The second factor is the compatibility between the two companies, as Watson has only a limited European presence, while Specifar mostly does business with Europe and especially France. Moreover, Specifar is building a new plant in the Oinofyta region north of Athens, which is expected to be completed by 2012 and which will represent Watson?s first production unit on European soil. The new plant is expected to increase the company?s production capacity threefold.

The third factor is the Greek company?s know-how in product design and development. According to a recent statement by Watson CEO Paul Bisaro, ?the strategic significance of this combination is substantial? as Watson ?will now have a powerful product development capability recognized throughout the industry for its strong track record of successfully launching products in key European markets, supported by an accomplished R