Russian API manufacturer eyes IPO and acquisitions

Russian active pharmaceutical ingredient manufacturer Pharmsynthez is planning a listing on the MICEX stock exchange to help it expand beyond Commonwealth of Independent States (CIS) markets.

The IPO is expected to take place in November and generate in the region of 500 million roubles ($16m), which would give Pharmsynthez a market capitalisation of more than $45 million.

Part of the money will be devoted to the expansion of its production facility near St Petersburg, according to chief executive Dmitry Genkin, while another tranche will go towards acquiring "strategic assets outside of Russia".

Pharmsynthez says its plans to expand outside the CIS could include acquisitions of pharmaceutical and research companies in the US, Europe and Israel.

Pharmsynthez already has a healthy share of the Russian and CIS market for APIs, and also sells some finished pharmaceuticals for cancer, infectious diseases and gynaecological indications. In the first half of 2010 it posted sales of 131 million roubles, more than double the same period of 2009.

The total Russian pharmaceutical market is currently valued at around $15 billion, and growing at a rate of almost 20% a year. While the internal market is still dominated by imported generic medicines, the Russian government recently initiated a stimulus plan aimed to encouraging domestic production of generics as well as innovative medicines.

In addition to APIs and generic, Pharmsynthez is also developing its own novel medicines including Virexa for cancer and MyeloXen for multiple sclerosis.

To help it further its ambitions, Pharmsynthez has appointed Miroslav Ravic and Howard Fisher to its board as independent non-executive directors.

Ravic will oversee the firm's clinical research programme while Fisher will take a strategic view of its international expansion plans and acquisitions.

Phil Taylor