- Purchase price of $765 million
- Strengthens core livestock business with industry-leading vaccines and pharmaceuticals for farmed fish, the fastest growing segment of animal health industry
- Gains late-stage pipeline anticipated to bring several new products to market in the near term
- Affirms value creation strategy to deploy capital to strengthen the portfolio and support future growth
Zoetis
Inc. (NYSE:ZTS) today announced an agreement to purchase PHARMAQ,
the global leader in vaccines and innovation for health products in
aquaculture, for a price of $765 million on a debt-free basis. Acquiring
PHARMAQ strengthens Zoetis’ core livestock business, giving the company
a market-leading presence in the fastest growing segment of the animal
health industry. Zoetis is purchasing PHARMAQ from a company owned by
Permira IV, a fund managed by the global investment firm Permira, which
has been the majority owner of the company since 2013.
PHARMAQ is the market leader in sales of vaccines for farmed fish, a
market segment growing 10% annually. The company generated revenues of
approximately $80 million in 2014 and has a presence in the major
aquaculture markets in the world. PHARMAQ revenue grew at a compound
annual growth rate of 17% from 2005 to 2014. Privately-held PHARMAQ has
approximately 200 employees, is based in Oslo, Norway, and has
subsidiaries in Chile, the United Kingdom, Vietnam, Spain, Turkey,
Panama, and Hong Kong.
“This acquisition is a great strategic fit that brings to Zoetis an
animal health leader with similar competitive advantages – an
industry-leading portfolio, strong customer relationships, and
world-class innovation and manufacturing,” said Zoetis Chief Executive
Officer Juan Ramón Alaix. “We are gaining a new platform for growth and
value creation that we can expand. PHARMAQ strengthens our core
livestock business by providing market leadership in aquatic health and
a strong late-stage pipeline in the world’s largest category of protein
and fastest growing animal health market.”
“We see a tremendous opportunity to grow our business as part of
Zoetis,” said Morten Nordstad, Chief Executive Officer at PHARMAQ.
“Zoetis has proven expertise in supporting livestock producers with
high-quality products and technical services that help improve animal
health, productivity and profitability. By combining our experience and
R&D capabilities, we believe we can optimize our industry-leading
ability to develop vaccines and medicines for farmed fish. With Zoetis’
global footprint, we can deliver greater value to more customers around
the world and accelerate our geographic expansion plans. This
acquisition is a testimony to our success and to the highly skilled,
innovative and hard-working employees of PHARMAQ.”
PHARMAQ’s well-respected R&D organization addresses many of the most
pressing health needs of the aquaculture industry. Its late-stage
development pipeline includes important new vaccines and next-generation
parasiticides expected to enter the Norwegian, Chilean and UK markets in
the near term.
Aquatic Health – The Fastest Growing Animal Health Segment
The market for aquatic health products serving aquaculture was valued at
approximately $400 million in 20141 and has been growing 7 to
8% annually.1 This growth rate is faster than the overall
livestock segment, which is growing at 6% CAGR, and the companion animal
segment, which is growing at 5% CAGR.2
Fish remains the most consumed animal source of protein worldwide.
Farmed fish accounts for about 50% of total fish consumption up from 15%
in 1990.3 Moreover, current medicalization rates for fish
rank at the lowest level of any livestock category. Healthcare spending
is expected to increase as productivity of fish farming becomes more
efficient to address the rising global demand for protein.
Addressing Growing Demand for Customized Aquatic Health Solutions
With this acquisition, Zoetis adds vaccine brands such as AlphaJect®
(an injectable vaccine) to its diverse portfolio of more than 300
product lines. It also adds parasiticides such as AlphaMax®
to protect farmed salmon from sea lice. PHARMAQ diagnostic products
complement the Zoetis diagnostics business and support customers with
early detection of infection and rapid response through more customized
solutions. PHARMAQ also provides dip/immersion vaccines, therapeutics,
and technical support services tailored to the needs of farmed fish
operations.
“We are excited to welcome the team from PHARMAQ, who share our passion
for supporting customers and keeping livestock healthy and productive,”
said Alejandro Bernal, Executive Vice President, Strategy, Commercial
and Business Development for Zoetis. “To ensure its continued success,
the PHARMAQ business will run largely as a stand-alone operation within
Zoetis and maintain its focus on critical customer needs and R&D
milestones.”
Zoetis expects to complete the acquisition on or about Nov. 10, 2015,
and it intends to draw on its revolving credit facility to finance the
transaction. Inclusive of financing costs, Zoetis expects the
transaction to be neutral to adjusted earnings in 2016 and become
accretive to adjusted earnings thereafter.
Zoetis will discuss the transaction on its regularly scheduled third
quarter financial investor conference call tomorrow, Nov. 3, at 8:30
a.m. (EST). Investors and the public may access the live webcast by
visiting the Zoetis website at http://www.zoetis.com/events-and-presentations.
A replay of the webcast will be archived and made available on Nov. 3,
2015.
For more information, visit www.zoetis.com
and www.PHARMAQ.no.
About Zoetis
Zoetis
(zô-EH-tis) is the leading animal health company, dedicated to
supporting its customers and their businesses. Building on more than 60
years of experience in animal health, Zoetis discovers, develops,
manufactures and markets veterinary vaccines and medicines, complemented
by diagnostic products and genetic tests and supported by a range of
services. In 2014, the company generated annual revenue of $4.8 billion.
With approximately 10,000 employees worldwide at the beginning of 2015,
Zoetis serves veterinarians, livestock producers and people who raise
and care for farm and companion animals with sales of its products in
120 countries. For more information, visit www.zoetis.com.
About PHARMAQ
PHARMAQ is the world's leading pharmaceutical company supplying the
aquaculture industry. The company provides environmentally sound, safe
and efficacious health products to the global aquaculture industry
through targeted research and the commitment of dedicated people. The
vaccines are manufactured in a state of the art production facility in
Overhalla and Oslo, Norway. Administration and research and development
activities are based in Oslo with subsidiaries in Norway, Chile, United
Kingdom, Vietnam, Turkey, Spain, Panama and Hong Kong. PHARMAQ has
approximately 200 employees. The company's products are marketed in
Europe, North and South America, and Asia. PHARMAQ's majority
shareholder is the private equity investment firm Permira Funds.
Management and employees hold a significant stake in the company. For
further information, please visit our website: www.PHARMAQ.no.
DISCLOSURE NOTICES
Forward-Looking Statements: This
press release contains forward-looking statements, which reflect the
current views of Zoetis with respect to business plans or prospects,
future operating or financial performance, expectations regarding
products, future use of cash and dividend payments, and other future
events. These statements are not guarantees of future performance or
actions. Forward-looking statements are subject to risks and
uncertainties. If one or more of these risks or uncertainties
materialize, or if management's underlying assumptions prove to be
incorrect, actual results may differ materially from those contemplated
by a forward-looking statement. Forward-looking statements speak only as
of the date on which they are made. Zoetis expressly disclaims any
obligation to update or revise any forward-looking statement, whether as
a result of new information, future events or otherwise. A
further list and description of risks, uncertainties and other matters
can be found in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2014, including in the sections thereof captioned
“Forward-Looking Information and Factors That May Affect Future Results”
and “Item 1A. Risk Factors,” in our Quarterly Reports on Form 10-Q and
in our Current Reports on Form 8-K. These filings and subsequent filings
are available online at www.sec.gov,
www.zoetis.com,
or on request from Zoetis.
1 Based on Zoetis data on file
2 Vetnosis
3 Food and Agriculture Organization of the United
Nations
Zoetis Media:
Bill Price, 973-443-2742
William.price@zoetis.com
or
Elinore White, 973-443-2835
Elinore.y.white@zoetis.com
or
PHARMAQ Media:
Tore Valderhaug, +47 99 56 09 25
tore.valderhaug@pharmaq.com
or
Zoetis Investor:
John O'Connor, 973-822-7088
john.oconnor@zoetis.com
or
Steve Frank, 973-822-7141
steve.frank@zoetis.com