ECONOMY

Genepharm shares soar

MELBOURNE – Genepharm Australasia Ltd., a small company that plans to market and distribute generic drugs, soared 32 percent above its issue price in its debut on the Australian Stock Exchange yesterday. Genepharm’s strong start contrasted with disappointing performances in big floats in the past two months, such as clothing retailer Just Group Ltd and zinc miner Zinifex Ltd., which have yet to trade above their offer prices. Genepharm Australasia raised A$12.6 million (US$8.7 million) with a sale of 25.18 million shares at 50 cents each. The group’s original owners, led by Greece-based Genepharm SA, own the remaining 52 million shares, or 67 percent of its stock. At the end of their first day on the board, the shares closed at 59 cents, 18 percent above the issue price, giving the group a market capitalization of A$45.6 million. The company wants to cash in on what is expected to be a rapidly growing market in Australia and New Zealand for generic drugs, with more than A$1.5 billion worth of drugs expected to come off patents over the next five to seven years. It has locked up the Australian and New Zealand rights to sell drugs made by Genepharm SA, which has about 100 generic drugs that could be sold when the original equivalents come out of patent over the next 10 years. Genepharm’s two biggest competitors in supplying generic drugs in Australia are Alphapharm Pty Ltd., owned by Merck KGaA, followed by Arrow Pharmaceuticals Ltd. Arrow’s drugs are manufactured by Sigma Co Ltd., which is also a drug distributor. Genepharm is looking to team up with wholesaler Sigma or Australian Pharmaceutical Industries Ltd., Managing Director Dennis Bastas said. «We’ve had several discussions with the two largest wholesale distributors,» Bastas told Reuters. «We expect at some point in the next six months that there’d be some conclusion to that process.» Sigma Managing Director Elmo de Alwis said Sigma is looking at opportunities in the rapidly growing generics market, but is happy with its arrangement with Arrow. «We want to explore all the opportunities we have. Probably we’ll stay with the one we’ve got,» he told reporters after speaking at a business lunch. He said it would be difficult for Sigma to set up its own generic business because it could put it in conflict with big drug companies whose products it manufacturers or distributes.