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Galen Hldgs (WCRX)

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Thursday 06 March, 2003

Galen Hldgs

Acquisition

Galen Holdings PLC
06 March 2003

6 March 2003


                               GALEN HOLDINGS PLC

   PROPOSED ACQUISITION OF WOMEN'S HEALTHCARE PRODUCTS PORTFOLIO FROM PFIZER


Craigavon, Northern Ireland, UK / Rockaway, New Jersey, US:  Galen Holdings PLC
(LSE: GAL, Nasdaq: GALN) (the 'Company' or 'Galen'), the international
pharmaceutical company, announces today that it and its wholly-owned subsidiary,
Galen (Chemicals) Limited ('Galen Chemicals'), have entered into two conditional
agreements with Pfizer Inc. ('Pfizer') to acquire the women's healthcare
pharmaceutical brands comprising the oral contraceptives Estrostep(R) and
Loestrin(R) and the hormone replacement therapy, femhrt(R) (together the 'Pfizer
Portfolio').


The Pfizer Portfolio is being acquired for a total initial consideration of
US$359 million, payable on completion.  Further contingent cash consideration up
to a maximum of US$125 million will become payable in the event that both femhrt
(R) and Estrostep(R) retain market exclusivity during the lives of their
respective patents. The consideration for the acquisitions will be financed
through a combination of existing cash resources and new committed bank
facilities available to Galen and its subsidiaries (the 'Group').



Highlights of the transaction:



•                The Pfizer Portfolio comprises the prescription oral
contraceptives under the Estrostep(R) and Loestrin(R)  brand names and the
femhrt(R) hormone replacement therapy.



•                Total turnover for the Pfizer products was approximately
US$228.3 million, US$265.2 million and US$211.1 million for the three years
ended 31 December 2000, 2001 and 2002, respectively.  In 2002, U.S. generated
sales for the three products were US$195.4 million comprising Estrostep(R) sales
of US$42.1 million, Loestrin(R) sales of US$92.5 million and femhrt(R) sales of
US$60.8 million.



•                The acquisitions will be funded through a combination of
existing cash resources and new committed bank facilities amounting to US$450
million made available to the Group by ABN AMRO Bank N.V., The Governor and
Company of the Bank of Ireland and Barclays Bank PLC.



•                The Pfizer Portfolio will have gross margins (approximately 90
per cent.) in excess of the average gross margin (approximately 78 per cent.)
for the Group's current pharmaceutical business.  The Pfizer Portfolio is
therefore expected to improve the overall gross margin for the Group.



•                The acquisitions will substantially increase the scale of the
Group's existing business.  Given the expected gross margins on the products in
the Pfizer Portfolio and their assimilation into the existing Galen
infrastructure, the Directors believe the Pfizer products will improve the free
operating cash flows, which will enable the repayment of debt, as well as being
earnings enhancing in the financial year ending 30 September 2003.



•                Galen's recent organic growth, combined with the expected
impact of the Sarafem(R) acquisition and the Pfizer product acquisitions, is
anticipated to lead to enhanced growth prospects for the Group.  In order to
support these levels of anticipated growth, the Directors intend to increase the
Group's US sales force by recruiting approximately 140 additional sales
representatives over the course of 2003.  This is expected to enable sufficient
sales and marketing resources to be allocated for the further promotion of the
Group's existing products, as well as the launches of FemringTM and the new
Ovcon(R) product, the recently acquired Sarafem(R) and, in due course, Estrostep
(R) and femhrt(R).



•                In view of their sizes, both of the acquisitions are
conditional upon the prior approval of the Company's shareholders which will be
sought at an Extraordinary General Meeting ('EGM').  Formal notice of the EGM,
together with further details of the Pfizer products and the acquisitions, will
be sent to shareholders in an explanatory circular which is expected to be
despatched later today.



•                Both acquisitions are conditional on US regulatory clearance
and are currently expected to complete by no later than 30 April 2003.



Commenting on the announcement, Roger Boissonneault, Galen's Chief Executive,
said:



'The acquisition of this portfolio is a significant move for the Company. It
enhances our growth strategy and fits with our focus on women's healthcare, a
key therapeutic area in which we can drive market share and grow the Company.
These products are complementary to our existing products, Ovcon(R), Estrace(R)
and FemringTM, for which Galen recently received an approvable letter from the
US Food and Drug Administration.  They will provide us with a significant
presence in women's healthcare and an expanded platform for future growth in
this therapeutic area.



'These products were developed by the women's healthcare group at Warner-Lambert
Company, prior to its acquisition by Pfizer in June 2000.  During my time at
Warner-Lambert, I and a number of the team at Galen were associated with these
products and believe that we can significantly contribute to the future growth
of this portfolio.'





ENQUIRIES:


Galen Holdings PLC
Geoffrey Elliott, Chief Financial Officer                 Tel: + 44 283 833 4974
David Kelly, SVP Finance and Planning


Hoare Govett Limited
(Sponsor, Financial Adviser and Broker)
Andrew Chapman/Justin Jones                               Tel: +44 20 7678 8000


Financial Dynamics
Sophie Pender-Cudlip/Francetta Carr                       Tel: + 44 20 7831 3113





For further information on Galen, please visit www.galenplc.com



An analyst conference call will take place today at 2 p.m. (UK) / 9 a.m. (US).
Please call Mo Noonan at Financial Dynamics on +44 (0)20 7269 7116 for further
details.  A copy of a slide presentation to accompany the call will be available
on Galen's website at http://www.galenplc.com/investor/presentations/index.htm



Forward looking statements in this report, including, without limitation,
statements relating to the Galen''s plans, strategies, objectives, expectations,
intentions and adequacy of resources, are made pursuant to the safe harbor
provisions of the U.S. Private Securities Litigation Reform Act of 1995. These
forward looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
Galen to be materially different from any future results, performance or
achievements expressed or implied by such forward looking statements. These
factors include, among others, the following: Galen's ability to manage its
growth, government regulation affecting the development, manufacture, marketing
and sale of pharmaceutical products, customer acceptance of new products,
competitive factors in the industries in which Galen operates, the loss of key
senior management or scientific staff, exchange rate fluctuations, general
economic and business conditions, and other factors described in filings of the
Galen with the SEC. Galen undertakes no obligation to publicly update or revise
any forward looking statement, whether as a result of new information, future
events or otherwise.



Hoare Govett Limited, which is authorised and regulated in the UK by the
Financial Services Authority, is acting for Galen Holdings PLC and no one else
in connection with the matters set out in this announcement and will not be
responsible to anyone other than Galen Holdings PLC for providing the
protections afforded to the clients of Hoare Govett Limited or for providing
advice in relation to the matters set out in this announcement or any
transaction referred to herein.



GALEN HOLDINGS PLC (the 'Company' or 'Galen')



6 March 2003



PROPOSED ACQUISITION OF WOMEN'S HEALTHCARE PRODUCTS PORTFOLIO FROM PFIZER



1.      Introduction



The Directors of Galen (the 'Board' or 'Directors') announce today that the
Company and its wholly owned subsidiary Galen (Chemicals) Limited ('Galen
Chemicals') have entered into two conditional agreements (the 'Agreements') with
Pfizer to acquire the women's healthcare pharmaceutical brands comprising
Estrostep(R) and Loestrin(R) (the 'OC Products') and femhrt(R) (the 'Femhrt
Product') in both cases together with certain other assets, contracts and rights
pertaining to these products (the OC Products and the Femhrt Product are
collectively referred to as the 'Pfizer Portfolio').  The initial consideration
for the Pfizer Portfolio is US$359 million, comprising US$197 million for the OC
Products and US$162 million for the Femhrt Product, to be satisfied in cash on
completion of the acquisition of the OC Products ('OC Completion') and
completion of the acquisition of the Femhrt Product ('Femhrt Completion')
respectively.  Further contingent cash consideration of up to a maximum of
US$55.4 million in the case of the OC Products and US$69.6 million in the case
of the Femhrt Product will become payable by Galen to Pfizer in the event that
Estrostep(R) and femhrt(R) retain market exclusivity during the lives of their
respective patents.



The consideration for the acquisitions of the OC Products and the Femhrt Product
(the 'Acquisitions') will be financed through a combination of existing cash
resources and new committed bank facilities available to the Group.



The acquisition of the Pfizer Portfolio has been structured as two transactions
with separate timetables because the acquisition of the Femhrt Product (the
'Femhrt Acquisition') is subject to the approval of the acquisition of Pharmacia
Corporation by Pfizer (the 'Pfizer Merger') by the US Federal Trade Commission
(the 'FTC') and may consequently take longer to complete.  As OC Completion is
not subject to the approval of the Pfizer Merger, the Board believes that there
is an advantage to Galen in completing the acquisition of the OC Products (the
'OC Acquisition') as soon as possible.  Nevertheless, the Board continues to
view the Acquisitions, commercially, as a single transaction with two
components.  In the event that only one of the Acquisitions completes, the Board
believes that significant benefits would continue to accrue to the Group.



In view of their sizes, the Acquisitions are conditional upon the prior approval
of the Company's shareholders which will be sought at an Extraordinary General
Meeting to be held at 12.00 noon on 25 March 2003.  Formal notice of the EGM
will be sent to shareholders in an explanatory circular which is expected to be
despatched later today (the 'Circular'). The Agreements are not
inter-conditional and it is anticipated that OC Completion will not occur at the
same time as Femhrt Completion. Hoare Govett Limited are acting as sponsor,
financial adviser and broker to the Company in respect of the Acquisitions.



2.      Background to and reasons for the Acquisitions



(a)                Background to the Acquisitions



As part of its commitment to achieving future growth for the business, Galen
continues to evaluate attractive opportunities to develop its pharmaceuticals
business.  In particular, the Company has been targeting the US pharmaceuticals
market where the Board believes significant future growth can be achieved.  The
acquisition in September 2000 of Warner Chilcott Inc. ('Warner Chilcott'), a
company specialising in women's healthcare, dermatology and urology, provided
Galen with access to the US pharmaceuticals market where the Company has since
achieved significant growth.  The Company operates competitively in the US
market through its sales team of approximately 200 persons, which is in direct
contact with specialists in practice.  The Group has expanded its business
through a combination of organic growth of its pharmaceutical business, the
launch of internally developed products (such as the launch in January 2002 of
Doryx 75(R) capsules (dermatological antibiotic)), and specific product
acquisitions that complement and strengthen the business.  Recent product
acquisitions include the purchase of women's healthcare brands such as Estrace
(R) (estrogen replacement tablets) and Sarafem(R), a US Food and Drug
Administration ('FDA') approved prescription treatment for premenstrual
dysphoric disorder ('PMDD'), the dermatology product Moisturel(R) (skin
moisturiser) and Duricef(R), a cephalosporin antibiotic.  Since 1 April 2001,
the Company has spent approximately US$430 million (£272 million) in cash
acquiring such products.



As John King, Executive Chairman of Galen, outlined in his letter to
shareholders on 8 May 2002, in order to release additional resources to finance
the Group's expansion in pharmaceuticals, and to improve operating margins,
Galen initiated a disposal programme of its pharmaceutical services businesses.
The process began with the sale in December 2001 of the Company's Chemical
Synthesis Services business and was followed in May 2002 with the sale of its
Clinical Trials Services business.   In August 2002, the Company announced the
sale of the last of its pharmaceutical services businesses, Interactive Clinical
Technologies.  The total cash proceeds from these disposals were approximately
£156 million (US$247 million).



Concurrent with the Company's disposal programme, and following the successful
international placing of the Company's shares in July 2001 (which raised
approximately £200 million (US$316 million) in cash to fund further acquisition
opportunities), the Board has been seeking to identify further attractive
opportunities to acquire established branded products or businesses to
supplement its pharmaceuticals business.  This approach has been complemented by
the Company's research and development strategy which is now firmly focused on
the development of proprietary products for commercialisation in the US.  In
recent months, Galen has started to benefit from this approach and, in what
represents one of the most important achievements in the Company's product
development history, it received, in October 2002, an approvable letter for its
first intravaginal ring product in the US, FemringTM.  The Company is currently
finalising labelling with the FDA and this product is expected to be available
for launch in the first half of calendar year 2003. FemringTM is currently
marketed in the UK as Menoring(R).  More recently, on 5 February 2003, the
Company announced that it had also received an approvable letter from the FDA
for its new Ovcon(R) product.  The Company is now working on fulfilling the
remaining FDA requirements and progressing towards approval of this product.
This product is expected to be available for launch in calendar year 2003.  The
issuance of the approvable letters for FemringTM and the new Ovcon(R) product
demonstrates the dedication and expertise of Galen's clinical, regulatory and
manufacturing team.  The Group has other products in development, including an
estradiol acetate estrogen replacement therapy product, for which the Company
expects to submit a new drug application ('NDA') in July 2003.



As is mentioned above, the Group's growing portfolio of branded women's
healthcare products was enhanced on 22 January 2003 when Galen completed its
acquisition of the US sales and marketing rights of Sarafem(R) from Eli Lilly &
Company ('Lilly').  Sarafem(R) is an FDA-approved prescription treatment for
PMDD, a severe form of premenstrual syndrome, and was the first FDA-approved
product for this condition.  Launched by Lilly in 2000, Sarafem(R) generated
sales of approximately US$85 million in the US in the year ended 31 December
2001 and the Directors firmly believe the PMDD market has potential for future
growth.  Galen considers this acquisition an excellent strategic fit given that
the majority of physicians prescribing Sarafem(R) are obstetricians/
gynaecologists, who comprise the same target market of specialist physicians as
for the Group's existing oral contraceptive and hormone replacement therapy
products.  Sarafem(R) has patent protection until at least November 2007.



The women's healthcare, dermatology and urology markets are characterised by the
dominance of specialist physicians who are responsible for writing the majority
of prescriptions for products in these therapeutic areas.  Accordingly, Galen's
salesforce strategy is focused on employing precision marketing techniques to
market and promote its key branded products to high volume prescribing
physicians.  These techniques involve detailed internal analysis of actual
prescription data to determine the most effective allocation of sales and
marketing resources and have enabled Galen to identify markets that offer
significant promise.  By employing these precision marketing techniques, Galen
has been able to sustain product growth, revitalise acquired products and
successfully launch new products in the US.  The success of this marketing
strategy is evidenced by the increase in sales of Doryx(R), Ovcon(R) 35 and
Estrace(R), where, comparing the calendar year 2000 to the calendar year 2002,
revenues for these products have increased by 343 per cent., 108 per cent. and
163 per cent. respectively.  This recent organic growth, combined with the
expected impact of the Sarafem(R) acquisition and the Acquisitions, is
anticipated to lead to enhanced growth prospects for the Group.  In order to
support these levels of anticipated growth, the Directors intend to increase the
Group's US sales force by recruiting approximately 140 additional sales
representatives over the course of 2003.  This is expected to enable sufficient
sales and marketing resources to be allocated for the further promotion of the
Group's existing products, as well as the launches of FemringTM and the new
Ovcon(R) product, the recently acquired Sarafem(R) and, in due course, Estrostep
(R) and femhrt(R).



Galen's strategy remains to establish itself as a business with the size and
capability to be a strong participant in its core therapeutic areas.  The
acquisition of Warner Chilcott in 2000 enabled Galen to establish a presence in
the US market and, following the strengthening of the management team since
then, it has been possible for the Group to embark on the next phase of its
strategy of building a portfolio of significant products in its core therapeutic
areas through a combination of acquisitions, such as Sarafem(R), and in-house
product development, such as FemringTM. Accordingly, the Group continues to
evaluate attractive acquisition opportunities which complement both Galen's new
and existing products and which meet the Group's acquisition criteria.  The
Board firmly believes that the Acquisitions represent such an opportunity.



(b)                       Reasons for the Acquisitions



The Pfizer Portfolio comprises three established women's healthcare brands
comprising two oral contraceptives, Estrostep(R) and Loestrin(R), and a hormone
replacement therapy treatment, femhrt(R), that are principally sold in the US.
The OC Products and the Femhrt Product, both individually and collectively,
represent an excellent strategic fit with the existing women's healthcare range
of Galen's pharmaceuticals business.  As a consequence, the OC Products and the
Femhrt Product, both individually and collectively, offer Galen an opportunity
to attain a stronger position in the specialist arena of women's healthcare in
the world's largest pharmaceutical market and an expanded platform for further
growth in this therapeutic area.



The Pfizer Portfolio originates from Warner-Lambert Company ('Warner-Lambert'),
which was acquired by Pfizer in June 2000.  The Pfizer Portfolio is well known
to the senior management of Galen, a number of whom were previously employed at
senior levels within Warner-Lambert and were responsible for the development and
successful commercialisation of these products.  In particular, Roger
Boissonneault, Galen's Chief Executive, is a named inventor on three of the
product patents relating to Estrostep(R) and femhrt(R) as well as the patent for
the credit card style packaging for Loestrin(R) and Estrostep(R).  As such, the
Acquisitions offer Galen an opportunity to benefit from a management team that
has specific knowledge of these products and their potential in the market.



Furthermore, the Acquisitions offer other significant commercial benefits:



•         As stated above, in the women's healthcare therapeutic area, Galen
focuses on oral contraception, hormone replacement therapy and PMDD.  The
Acquisitions complement Galen's strategy of expanding the Group's presence in
these areas.



•         In the year 2001, the oral contraceptives market was valued at
approximately US$2.2 billion in annual revenues (source: IMS Health Retail
Pharmacy and Non-Federal Hospital Audit for January-December 2001) and has
experienced growth due to the baby boom echo and expanded use of oral
contraceptives by older reproductive women.  Galen's presence in this market is
small at this time and, therefore, the OC Acquisition offers the Group a
significant opportunity to improve its position in this market.



•         Over the same period, the hormone replacement therapy market
(comprising estrogen only and estrogen/progesterone replacement therapies) was
valued at approximately US$2.1 billion in annual revenues (source: IMS Health
Retail Pharmacy and Non-Federal Audit for January - December 2001) and is
expected to continue growing due to the ageing baby boomer generation.  As
Galen's presence in this market is small at this time, the Femhrt Acquisition
offers the Group a significant opportunity to improve its position in this
market.



•         Galen, through Warner Chilcott in the US, has developed relationships
with prescribing obstetricians and gynaecologists through the promotion of
existing products (Ovcon(R) and Estrace(R) cream).  Galen intends to leverage
these relationships with the addition of the Pfizer Portfolio.



•         Estrostep(R) is a phasic oral contraceptive (which varies the ratio of
estrogen to progestin throughout the cycle) while Ovcon(R) is a monophasic oral
contraceptive (whereby the ratio of estrogen to progestin remains constant
throughout the cycle).  Loestrin(R) 1/20 is a monophasic low-dose oral
contraceptive, suitable for patients who benefit from lower doses of estrogen
and progestin, such as perimenopausal women.  The acquisition of the OC Products
will therefore broaden Galen's range of oral contraceptive products.



•         The acquisition of femhrt(R) will both expand Galen's range of hormone
replacement therapy products and complement FemringTM.  femhrt(R) will be
promoted for women with an intact uterus, whilst FemringTM will be used
primarily for women who have had a hysterectomy or those who are on a cyclic
regimen.  Therefore, both products can be promoted in the same presentation.



•         The products within the Pfizer Portfolio will have gross margins
(approximately 90 per cent.) in excess of the average gross margin
(approximately 78 per cent.) for the Group's current pharmaceutical business.
The Pfizer Portfolio is therefore expected to improve the overall gross margin
for the Group.



•         Given the product fit of the Pfizer Portfolio and existing physician
coverage supported by the recruitment of additional sales representatives in the
US, the Directors consider that the Acquisitions will further enhance the
Group's ability to achieve growth and raise its market profile.



•         The Acquisitions will substantially increase the scale of the Group's
existing business.  Moreover, given the expected gross margins on the products
in the Pfizer Portfolio and their assimilation into the existing Galen
infrastructure, the Directors believe the OC Products and the Femhrt Product,
both collectively and individually, will improve free operating cash flows,
which will enable the repayment of debt, as well as being earnings enhancing in
the financial year ending 30 September 2003.



Overall, in the opinion of the Board, the Pfizer Portfolio is an excellent
strategic fit and the Acquisitions represent a significant commercial
opportunity to further develop Galen's US pharmaceuticals business and improve
its profile in the women's healthcare market in the US. For these reasons the
Board believes that the value of the Acquisitions to the Company, both
collectively and individually, justify the price and terms upon which the Pfizer
Portfolio is to be acquired.





3.         Information on the Pfizer Portfolio



The Pfizer Portfolio comprises the prescription oral contraceptives under the
Estrostep(R) and Loestrin(R) brand names and the femhrt(R) hormone replacement
therapy.  Total turnover for the Pfizer Portfolio was approximately US$228.3
million (comprising OC Products sales of US$202.7 million and Femhrt Product
sales of US$25.6 million), US$265.2 million (comprising OC Products sales of
US$213.9 million and Femhrt Product sales of US$51.3 million) and US$211.1
million (comprising OC Products sales of US$144.3 million and Femhrt Product
sales of US$66.8 million) for the three years ended 31 December 2000, 2001 and
2002, respectively.



(a)         The OC Products



Estrostep(R) was introduced in 2000 and is one of only three currently marketed
oral contraceptives which are indicated for the treatment of moderate acne in
women who desire oral contraception.  Estrostep(R) is targeted for younger
patients (18-25 years) using oral contraception for the first time.  Estrostep
(R) sales in the financial year ended 31 December 2002 were US$42.1 million
(2001: US$43.2 million).  Estrostep(R) is patent protected in the US until 2008
and is a registered trademark in the US.



Loestrin(R) was introduced in 1973 as one of the first low dose oral
contraceptives.  It is available in two formulations; Loestrin(R) 1/20 and
Loestrin(R) 1.5/30.  Loestrin(R) 1/20 is positioned as a low estrogen-containing
product suitable for perimenopausal women.  Loestrin(R) 1.5/30 is positioned as
a problem-solver for women experiencing breakthrough bleeding on other oral
contraceptives.  Loestrin(R) sales in the year ended 31 December 2002 were
US$102.2 million (2001: US$170.7 million).  Whilst its patent has expired,
Loestrin(R) is a registered trademark in the US.  Sales of this product fell in
2002 following the launch in October 2001 of a generic competitor and the
cessation of active marketing and promotion of Loestrin(R) by Pfizer.



Patent litigation



In 2001 and 2002, Pfizer initiated legal proceedings against Barr Laboratories
Inc. ('Barr Laboratories') for patent infringement in respect of Estrostep(R).
These proceedings were initiated in response to two abbreviated NDAs filed by
Barr Laboratories to market generic versions of Estrostep(R).  Fact discovery
has commenced but no trial date has been set.  The Company and its counsel have
evaluated the risks associated with these proceedings and the Company believes
that these risks have been reflected in the purchase price.  However, an adverse
outcome in these proceedings is likely to have a material adverse impact on the
Group's operational results because the introduction of a generic competitor to
Estrostep(R) would be likely to materially reduce sales of Estrostep(R) branded
products.   This potential impact is expected to be mitigated by the contingent
consideration provisions in the agreement for the OC Products which, in certain
circumstances, will reduce the amount of consideration payable by Galen to
Pfizer if Estrostep(R) loses its market exclusivity prior to the expiration of
applicable patents.  Galen intends to continue to pursue these claims
vigorously.



(b)         The Femhrt Product



femhrt(R) was introduced in 2000 and is a continuous combined hormone
replacement therapy that consists of a low-dose estrogen (ethinyl estradiol) and
a progestin (norethindrone acetate).  femhrt(R) is used to treat the symptoms of
menopause in patients with an intact uterus, including vasomotor symptoms.
Sales of femhrt(R) were US$66.8 million in the year ended 31 December 2002
(2001: US$51.3 million).  femhrt(R) is patent protected in the US until May 2010
and is a registered trademark in the US.



Patent litigation



In 2001, Pfizer initiated legal proceedings against Barr Laboratories for patent
infringement in respect of femhrt(R).  These proceedings were initiated in
response to an abbreviated NDA filed by Barr Laboratories to market a generic
version of femhrt(R).  Fact discovery has commenced and a trial date has been
set for February 2004.  The Company and its counsel have evaluated the risks
associated with these proceedings and the Company believes that these risks have
been reflected in the purchase price.  An adverse outcome in these proceedings
is likely to have a material adverse effect on the Group's operational results
because the introduction of a generic competitor to femhrt(R) would be likely to
materially reduce sales of femhrt(R) branded products.  This potential impact is
expected to be mitigated by the contingent consideration provisions in the
agreement for the Femhrt Product which, in certain circumstances, will reduce
the amount of consideration payable by Galen to Pfizer if femhrt(R) loses market
exclusivity prior to the expiration of the applicable patents.  Galen intends to
continue to pursue these claims vigorously.



FDA draft labelling guidance



The FDA has issued draft labelling guidance for noncontraceptive estrogen drug
products for the treatment of moderate to severe vasomotor symptoms and/or
moderate to severe symptoms of vulvar and vaginal atrophy, which would include
femhrt(R), in response to the early termination of a component of the Women's
Health Institute study.  This component, consisting of a large scale randomised
controlled clinical trial involving approximately 16,600 postmenopausal women
comparing PremproTM to placebo in non-hysterectomised patients, was terminated
early when it was determined by the safety monitoring board that the risks of
that component exceeded the benefits.  Pfizer has submitted to the FDA proposed
amended labelling for femhrt(R) in response to the FDA guidance.



(c)         Manufacturing and packaging



Estrostep(R) and Loestrin(R) are manufactured and femhrt(R) is packaged at
Pfizer's manufacturing facility in Fajardo, Puerto Rico.  In accordance with the
agreement for the OC Products, Galen will be granted a right of first refusal on
any future sale of the Fajardo facility by Pfizer.  This right will be capable
of exercise for a period of 5 years following OC Completion and will be
triggered if Pfizer decides to solicit offers from third parties for the sale of
the facility during this period.



In order to facilitate the orderly transfer of the Pfizer Portfolio, the parties
have agreed to enter into certain transitional agreements governing, amongst
other things, the supply of products currently manufactured at the Fajardo
facility.  Although Galen has the right of first refusal to purchase the
facility, the Board expects that the term of the transitional agreements will
allow Galen sufficient time to identify alternative sources for the supply of
the services currently provided at the Fajardo facility, should such alternative
sources be needed.  The Board believes that the migration of the production of
the Pfizer Portfolio away from the current manufacturing plants could be
facilitated if this was deemed to be the appropriate commercial strategy for the
Company.



femhrt(R) is contract manufactured under the agreement between Warner-Lambert
Company ('Warner-Lambert') and Duramed Pharmaceuticals Inc. (the 'Duramed
Agreement').  In accordance with the terms of the agreement for the Femhrt
Product, the Duramed Agreement has been assigned to the Group by Warner-Lambert,
conditional on Femhrt Completion.



4.         Financial information on the Pfizer Portfolio



Under the terms of the Agreements, the Group will only acquire certain assets of
Pfizer, principally being all the rights relating to, and inventories of, and
promotional and regulatory material for, the OC Products and the Femhrt Product.
  No other parts of the Pfizer Group's operations, including any of its
employees or sales and marketing support, are being acquired by the Group.  As a
result, the level of costs incurred by Pfizer, and thereby reflected in the
historic net income of the Pfizer Portfolio are not expected to be incurred by
Galen following OC Completion and/or Femhrt Completion.  Accordingly, the
Directors believe that the sales record of the Pfizer Portfolio is the only
historic audited financial information that is relevant for the consideration of
the Acquisitions.



Total turnover for the Pfizer Portfolio was approximately US$228.3 million
(comprising OC Products sales of US$202.7 million and Femhrt Product sales of
US$25.6 million), US$265.2 million (comprising OC Products sales of US$213.9
million and Femhrt Product sales of US$51.3 million) and US$211.1 million
(comprising OC Products sales of US$144.3 million and Femhrt Product sales of
US$66.8 million) for the three years ended 31 December 2000, 2001 and 2002
respectively.



In addition, pursuant to the transitional agreements and the Duramed Agreement,
the Group will secure supplies of Estrostep(R), Loestrin(R) and femhrt(R) on
terms that the Directors believe will enable a gross margin of approximately 90
per cent. to be achieved on sales of these products in the year ending 30
September 2003.



5.         Financial effects of the Acquisitions



The funding structure of the Acquisitions is expected to increase the gearing of
the Group to 36.9 per cent. on a pro forma basis.



The Directors believe that the OC Products and the Femhrt Product, both
collectively and individually, will improve free operating cash flows, which
will enable the repayment of debt, as well as being earnings enhancing in the
financial year ending 30 September 2003.



6.         Principal terms and conditions of the Acquisitions



Galen and Galen Chemicals have entered into two conditional agreements with
Pfizer to acquire the Pfizer Portfolio.  Galen is not acquiring any related
manufacturing or sales facilities, staff or other sales and marketing support.



The initial consideration for the Pfizer Portfolio is US$359 million, comprising
US$197 million for the OC Products and US$162 million for the Femhrt Product, to
be satisfied in cash on OC Completion and Femhrt Completion, respectively.
Further contingent cash consideration of up to a maximum of US$55.4 million in
the case of the OC Products and US$69.6 million in the case of the Femhrt
Product will become payable to Pfizer in the event that Estrostep(R) and femhrt
(R) retain market exclusivity during the lives of their respective patents.



The acquisition of the OC Products is conditional, inter alia, upon:



•         approval by the Company's shareholders at the EGM; and

•         clearance under the US Hart-Scott-Rodino Act 1976.



A break fee of US$3.3 million (£2.1 million) will be payable by the Company to
Pfizer in certain circumstances, including in the event that the Board withdraws
or modifies (in an adverse manner) its recommendation to the Company's
shareholders to vote in favour of the acquisition of the OC Products.



The acquisition of the Femhrt Product is conditional, inter alia, upon:



•         approval by the Company's shareholders at the EGM;

•         clearance from the US Federal Trade Commission of the Pfizer Merger;
and

•         consent of Duramed Pharmaceuticals Inc. ('Duramed') to the assignment
of Warner-Lambert's rights and obligations under the Duramed Agreement to Galen
Chemicals.



As at the date of this announcement, the Board has received confirmation that
conditional consent of Duramed had been given to the above assignment.



A break fee of US$2.7 million (£1.7 million) will be payable by the Company to
Pfizer in certain circumstances, including in the event that the Board withdraws
or modifies (in an adverse manner) its recommendation to the Company's
shareholders to vote in favour of the acquisition of the Femhrt Product.



7.         Funding of the Acquisitions



The Acquisitions are being financed through a combination of existing cash
resources and new committed bank facilities available to the Group.  The new
committed bank facilities are being made available by ABN AMRO Bank NV, the
Governor and Company of the Bank of Ireland and Barclays Bank PLC pursuant to a
US$450 million credit agreement.



8.          Current trading and future prospects of the enlarged Group



On 11 February 2003, the Company announced unaudited first quarter results of
the Group for the three months ended 31 December 2002.  Turnover was US$68.6
million (2001: US$54.9 million) and operating profits for the pharmaceutical
products business were US$24.9 million (2001: US$18.3 million).



Galen reported further progress with its in-house product development programme
with the receipt of an approvable letter in October 2002 for its first
intravaginal ring product in the US, FemringTM. The Company is currently
finalising labelling with the FDA and this product is expected to be available
for launch in the first half of calendar year 2003.



In common with all pharmaceutical companies with patent protected products,
Galen's business is subject to the risk of introduction of generic versions of
its products. Galen endeavours to extend and enhance the earning capacity of its
existing brands through a combination of line extensions and new products.
Examples include the launch of Doryx(R) 75 in January 2002 as well as the new
Ovcon(R) product, for which Galen received an approvable letter from the FDA in
February 2003. Galen is currently working on fulfilling the remaining FDA
requirements and progressing towards approval of the new Ovcon(R) product. This
product is expected to be available for launch in the first half of calendar
year 2003.



Moreover, as detailed above, patent infringement lawsuits are pending in
connection with attempts by generic companies to obtain generic marketing
approval for Sarafem(R), Estrostep(R) and femhrt(R). Galen intends to vigorously
defend these patents. Such patent litigation tends to be lengthy and complex
and, while there can be no certainties as to the respective outcomes, the
Directors believe that the price paid for these products fully reflects the
position and economic prospects of these products.



Following the strong start to the year announced on 11 February 2003 and which
has been continued into the second quarter, together with the anticipated
development of the Company's existing product portfolio, including the launch of
FemringTM, the recent acquisition of Sarafem(R) and the proposed acquisition of
the Pfizer Portfolio, the Directors continue to view the prospects for the
enlarged Group for 2003 with confidence.



ADDITIONAL INFORMATION



Further details of, amongst other things, the Acquisitions, the new committed
bank facilities and the Pfizer Portfolio will be contained in the Circular to be
sent to shareholders of the Company later today.



Solely for the convenience of the reader, this announcement, unless otherwise
stated, contains translations of pound sterling amounts to US dollars (and,
where appropriate, vice versa) based on a rate of £1.00 = US$1.5816, being the
closing mid-point spot exchange rate set out in the Financial Times on 5 March
2003, the latest practicable date prior to the publication of this announcement.



ENQUIRIES

Galen Holdings PLC
Geoffrey Elliott, Chief Financial Officer                 Tel: + 44 283 833 4974
David Kelly, SVP Finance and Planning


Hoare Govett Limited
(Sponsor, Financial Adviser and Broker)
Andrew Chapman/Justin Jones                               Tel: + 44 20 7678 8000


Financial Dynamics
Sophie Pender-Cudlip/Francetta Carr                       Tel: + 44 20 7831 3113


For further information on Galen, please visit www.galenplc.com




Note:



Forward looking statements in this report, including, without limitation,
statements relating to the Galen''s plans, strategies, objectives, expectations,
intentions and adequacy of resources, are made pursuant to the safe harbor
provisions of the U.S. Private Securities Litigation Reform Act of 1995. These
forward looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
Galen to be materially different from any future results, performance or
achievements expressed or implied by such forward looking statements. These
factors include, among others, the following: Galen's ability to manage its
growth, government regulation affecting the development, manufacture, marketing
and sale of pharmaceutical products, customer acceptance of new products,
competitive factors in the industries in which Galen operates, the loss of key
senior management or scientific staff, exchange rate fluctuations, general
economic and business conditions, and other factors described in filings of the
Galen with the SEC. Galen undertakes no obligation to publicly update or revise
any forward looking statement, whether as a result of new information, future
events or otherwise.



Hoare Govett Limited, which is authorised and regulated in the UK by the
Financial Services Authority, is acting for Galen Holdings PLC and no one else
in connection with the matters set out in this announcement and will not be
responsible to anyone other than Galen Holdings PLC for providing the
protections afforded to the clients of Hoare Govett Limited or for providing
advice in relation to the matters set out in this announcement or any
transaction referred to herein.


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            The company news service from the London Stock Exchange