Collagenase Wound Care Product Acquired
Smith & Nephew Plc
1 February 2000
SMITH & NEPHEW ACQUIRES COLLAGENASE WOUND CARE PRODUCT
Smith & Nephew, the global medical device company, today announced the
acquisition of the Collagenase product of BASF Pharma, the pharmaceutical arm
of BASF AG, for a total cash consideration of £74m. The acquisition
represents a major addition to the group's Wound Management business.
Collagenase Product
The BASF Pharma Collagenase product, branded as Santyl in North America and as
Iruxol and Novuxol in the rest of the world, is one of the three largest wound
care products globally. The product is an enzyme which cleanses and debrides
(removes dead tissue from) chronic wounds and burns. The brands have strong
market positions in the US, Germany, Spain, Italy and Brazil. Sales for 1999
are estimated at £44m, growing at an approximate underlying rate of 8%.
Acquisition Arrangements
Smith & Nephew will acquire the trademarks, manufacturing rights and
distribution rights, in a phased programme, for all territories outside North
America. This acquisition is conditional on approval of the Federal Cartel
Office in Germany. In North America, Smith & Nephew will acquire the
trademarks and an exclusive sub-licence for the marketing and sale of
Collagenase, where the product is sold under licence from Advance Biofactures
Corporation (a subsidiary of Biospecifics Technologies Corporation), which has
given consent to this agreement and will continue to supply the active
ingredient for the product sold in North America. BASF Pharma will continue
to manufacture the product on behalf of Smith & Nephew under a long term
agreement.
Smith & Nephew will assume distribution of the product immediately in the US
and Canada and on a phased basis in the rest of the world.
Of the total cash consideration of £74m, £37m will be payable in 2000, £28m
payable in 2001 and £9m payable over a five year period commencing in 2002.
Apart from £1m of inventory, no other tangible assets are included. Profit
will cover interest and amortisation in 2000 and progressively add to earnings
thereafter.
Strategy
Collagenase adds one of the three largest global products to Smith & Nephew's
Wound Management business and establishes it in a leading position in the
pharmaceutically active segment of the wound care market. This sector is
expected to continue to grow strongly. We will be taking over the selling
resource from BASF Pharma in a number of key markets which will add
significant critical mass to the group's sales and marketing capability. In
the US alone this will give the company effectively a full time sales force of
190, the second largest in this sector. In major markets where it is
currently not registered, such as the UK, France, Japan and Australia, the
intention is to establish Collagenase and to drive further the product's
growth rate.
Chris O'Donnell, Chief Executive of Smith & Nephew, commented: 'The
acquisition of Collagenase represents a transforming step for our Wound
Management business. It provides a 20% step-up in our Wound Management sales,
adding significant selling resource world-wide, and establishing Smith &
Nephew as clear global leaders in this market. Our focus on the growth
markets in Orthopaedics, Endoscopy and Wound Management is further emphasised
by this acquisition.'
Enquiries:
Chris O'Donnell, Chief Executive Tel: +44 (0) 207 401 7646
Smith & Nephew plc Fax: +44 (0) 207 930 3426
Peter Hooley, Finance Director Tel: +44 (0) 207 401 7646
Smith & Nephew plc Fax: +44 (0) 207 930 3418
David Yates Tel: +44 (0) 171 831 3113
Financial Dynamics Fax: +44 (0) 171 831 6341
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