Injectable drugs component maker West Pharmaceutical Services Inc. (NYSE: WST), as acquired privately-held Medimop Medical Projects Ltd. of Raanana, a developer of disposable medical devices for injectable drugs.
Medimop's technologies and systems are used in the reconstitution, transfer and administration of pharmaceutical products in therapeutic areas including multiple sclerosis, rheumatoid arthritis, vaccines, hormones and blood derivatives for haemophilia.
Under the acquisition agreement, West Pharmaceutical Services will acquire 90% of Medimop's shares, paying $36 million in cash, West Pharmaceutical Services shares valued at $4 million and up to $1.8 million of contingent cash consideration.
The transaction is expected to close in the third quarter of 2005.
Medimop founder and president Freddy Zinger will continue to hold the remaining 10% ownership of the company, which West Pharmaceutical Services will have the option to acquire at fair value in the future.
Medimop's business and management team will remain in Ra'anana, Israel. Medimop has approximately 20 employees and manufactures its products at locations in Israel and Germany.
West Pharmaceutical Services noted that the acquisition will be financed with the proceeds from its recently expanded bank debt and from planned private lender debt.
West Pharmaceutical Services stated that it anticipates the acquisition of Medimop will be earnings-neutral for 2005 on sales of approximately $8 million for the second half of the year.
West Pharmaceutical Services president and COO Steven A. Ellers said, "West's goal is to create value by providing our customers with a broad range of components and assembled devices that can make drug products safer and easier to use, from production and packaging through the point of use."
Many drug products, including the majority of recently introduced biotechnology products, require reconstitution at the point of use because they are produced as freeze-dried powders in order to preserve product efficacy during shipment and storage.
This market -- solutions for drug products requiring additional handling at the point of use -- was entered directly by West Pharmaceutical Services through the licensing and development of a proprietary, single use drug reconstitution system.
"We believe this acquisition is a strong strategic fit with our business in the injectable drug market and demonstrates our commitment to products that improve the safety and effectiveness of drug administration," Ellers said.
Zinger said, "I am pleased with the acquisition by West and believe that the growth of Medimop's standard-setting products and technologies will be further enhanced through West's sales and marketing reach and it's depth of experience in supplying pharmaceutical and medical device clients with critical components."
West Pharmaceutical Services is headquartered in Lionville, Pennsylvania. The company manufactures components and systems for injectable drug delivery, including stoppers and seals for vials, and closures and disposable components used in syringe, IV and blood collection systems. The company also provides products with application to the personal care, food and beverage markets. Customers include pharmaceutical, biotechnology, generic drug and medical device producers in 50 locations throughout North America, South America, Europe, Mexico, Japan, Asia and Australia. Zinger told "Globes" today that Medimop would be West Pharmaceutical’s arm for developing new products and preparing them for production. He added that the deal was slated for completion in the third quarter of this year. Zinger, who left Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) in the mid-1980s, founded Medimop with his own money in the early 1990s. The company has not raised money, and Zinger said it began making sales from its earliest days.
"Globes": Who financed the company before it was acquired?
Zinger: ”The company had revenue from the first moment. Medimop never took a bank loan or raised external capital. The company always had money in the bank. A few years ago, we invested several million dollars in setting up a manufacturing plant.”
Zinger says that the company manufactures both in Israel and overseas. He explains, “Some production in the north is in a plant that has approved enterprise status. This makes a proportion of sales tax exempt.
”Medimop has created a niche in the market that did not previously exist. The company developed a unique niche in preparing and mixing injectable drugs, mostly for patients treated at home. The products make the mixing process easy and quick for home use, even for people who are handicapped and untrained. Manufacturing is carried out in cooperation with the PMP plant in Shlomi under an outsourcing arrangement. PMP is a special plant that focuses on our products, and enables us to create our niche. They make the plastic adapters that we develop for quick and effective injection. These products meet very exacting technical standards.”
One of Medimop’s first projects was cooperating with Teva in marketing of Copaxone. Zinger says, “Copaxone is now marketed in a pre-prepared syringe, but at the beginning, the drug had to be mixed before being injected. Today, we’re working with a long list of large international pharmaceutical companies.”
How did the connection with West Pharmaceutical come about?
”I decided a year ago that they were a desirable bridegroom. They are the only company in the world that suits us, and vice-versa. I hope that the agreement will be signed in the next few weeks.”
Published by Globes [online] - www.globes.co.il - on July 6, 2005