Scandinavian pharmaceutical corporation Oriola-KD has signed an agreement to acquire a 75% share of the Moscow-based pharmaceutical retail and wholesale companies Vitim & Co and Moron Ltd.
The acquisition consideration is EUR70-90 million based on the financial performance of the acquired companies in 2008. The closing of the transaction is expected to take place in April 2008. Oriola-KD has also agreed to acquire the remaining 25% share of the companies in 2010 at a value based on the financial performance of the companies in 2009.
The acquisition of Vitim and Moron is a major strategic step forward for Oriola-KD in investing in Russia’s fast-growing pharmaceutical market. Vitim is operating in pharmacy retail in Moscow and the Moscow region under the well-known Stary Lekar brand. Moron is operating nationwide in pharmaceutical wholesale. The combination of Vitim and Moron provides Oriola-KD a unique opportunity to invest in the developing Russian pharmaceutical market. Oriola-KD is planning to invest considerably and offer its strong logistical know-how to strengthen the operations and their competitiveness in partnership with the founders and current owners Mr. Igor Yankov and Mr. Oleg Yankov. The founders will continue in their leading management role in Vitim and Moron and retain a 25% ownership in the Finnish-based holding company that will fully own the operating companies in Russia.
Vitim, founded in 1999, has established growing pharmacy chain operations in Moscow and the Moscow region under the Stary Lekar brand, and it is the third largest pharmacy chain in Moscow with a market share of some 5 percent in 2007. The Stary Lekar brand has been rated as one of the best-known among Moscow’s pharmacy chains. The pharmacy chain is based on a new pharmacy concept with modern sales and management technologies and a combined assortment of both pharmaceuticals and OTC products. Vitim currently operates some 140 pharmacies and employs 1600 persons.
Moron, founded in 1996, is the primary supplier for Vitim and has established growing pharmaceutical wholesale operations to independent pharmacies, retail chains, regional wholesale companies and hospitals in Russia. Moron’s market share in the Russian pharmaceutical wholesale market is around 5%.
The value of the Russian pharmaceutical market based on the consumer prices including consumer healthcare products was approximately EUR10 billion in 2006 and the market is estimated to grow close to 20% annually in 2008-2013. The market is also expected to grow due to an ageing population and increasing government spending in the healthcare sector.
Eero Hautaniemi, President and CEO, Oriola-KD Corporation, said: “The acquisition of Vitim and Moron is a major strategic step forward for Oriola-KD in investing in Russia’s fast-growing pharmaceutical retail and wholesale market. Oriola-KD is committed to invest considerably and offer its logistical know-how to strengthen the operations and continue the successful development of Vitim and Moron in close partnership with the founders. This strategic acquisition also further improves Oriola-KD’s position to participate in the proposed Swedish pharmacy market deregulation.”